Respuesta :
False, Interest expense changes when the carrying amount of the liability rises under the effective interest method.
What is effective interest method?
The effective-interest method uses the bond's carrying value and the market interest rate to calculate interest costs. Consequently, as a bond's book value increases, the amount of interest expense increases. The straight-line method, which distributes the same amount of the bond discount or premium for each interest payment, is not permitted under generally accepted accounting principles (GAAP), hence the effective-interest methodology must be used instead. Effective interest amortization is more accurate than straight-line amortization. The effective-interest method shall be applied consistently with International Financial Reporting Standards (IFRS).
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