Answer the following statements true (T) or false (F)

1. When a bond is issued at a premium, the interest expense calculation using the effective-interest amortization method uses the carrying amount of the bonds and the market rate of interest.
2. Using the effective-interest amortization method, the calculation for the amount of premium amortization is the difference between the cash paid for interest and the calculated interest expense based on the effective interest rate.
3. Using the effective-interest amortization method, the amount of premium amortization remains the same over the life of the bond.


1. TRUE
2. TRUE
3. FALSE

Business

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