Answer:
Both interest expense and the bond carrying value would be overstated
Explanation:
The reason is that when we don't amortize the premium on an outstanding amount then we are in fact overstating the value of the bond that as the premium amount not amortized keeps increasing the interest value and also the carrying value of the bond. Thus this increases the interest expense due to overstated bond's carrying value and bond's carrying value is overstated due to not amortizing the bond premium.
