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how would the outstanding balance (book value) of bonds payable be affected by the amortization of each of the following? bond premium bond discount a. no effect no effect b. no effect increase c. increase decrease d. decrease increase

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Tutorconsortium422

Increase a reduction is D. This implies that as time goes on, the net amount of the bonds payable account will decrease in balance.

The amortisation of each of the ensuing discount premiums would have an impact on the carrying value of a bond payment.?

Bonds will have a higher carrying value if the bond discount balance is reducing. Bond premium is the sum added to the bond's face value for determining the bond's carrying value. Both the sum and the carrying value will be reduced via amortisation.

How does amortising a bond discount work?

As a result of amortising discounted bonds, a real interest expenditure is always incurred that exceeds the amount of the bond interest coupon that is paid each period.

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