Question

When using straight line amortization on premium bonds:_______.

A. the same interest income is reported each year
B. decreasing interest income is reported each year
C. increasing interest income is reported each year
D. the reported interest income is determined by the current market price of the bond

Answer 1

Answer: the same interest income is reported each year

Step-by-step explanation:

The straight-line amortization method is a simple way to amortize a bond as an equal amount of interest are allocated over every accounting period.

When using straight line amortization on premium bonds, the same interest income is reported each year. Therefore, option A is the best answer.