The effective interest amortization method:

A) Allocates bond interest expense over the bond's life using a changing interest rate.
B) Allocates bond interest expense over the bond's life using a constant interest rate.
C) Allocates a decreasing amount of interest over the life of a discounted bond.
D) Allocates bond interest expense using the current market rate for each interest period.
E) Is not allowed by the FASB.

The effective interest amortization method allocates bond interest expense over the bond's life using a constant interest rate, which is the rate at which the bond was issued. This rate is used to calculate the interest expense for each period, which is then added to the carrying value of the bond to arrive at the new carrying value for the next period. This method ensures that the interest expense is recognized in a systematic and consistent manner over the bond's life.