71) A dollar received today is worth more than a dollar to be received 5 years from now.
72) Debentures carry a lower interest rate than secured bonds because of the risk associated with them.
73) A bond issued at a price above its maturity or par value is sold at a premium.
74) Another name for effective-interest is market interest.
75) The market or effective rate of interest is used to calculate the actual amount of interest bondholders will receive from a company issuing bonds.
76) The account
Discount on Bonds Payable
is a contra account to the account
Bonds Payable.
77) The carrying amount of bonds issued at a discount is calculated by subtracting
Discount on Bonds Payable
from
Bonds Payable.
78) The effective-interest method of amortization keeps interest expense at the same dollar amount of the bond's carrying value for every interest payment over the bond's life.
79) Interest expense will decrease each period if a company uses the effective-interest method of amortization and the bonds are issued at a discount.
80) The carrying amount of bonds issued at a premium is calculated by subtracting
Premium on Bonds Payable
to
Bonds Payable.