When a bond payable is issued at a premium, subsequent amortization of the premium Increases interest expense. Option A
A business may spread out the expense of a patent throughout the course of its usefulness. Consider a scenario in which a corporation holds the sole rights to a patent for ten years with no option for renewal.
The amount of principal and interest paid each month over the duration of your loan term is simply referred to as amortization. The majority of your payment goes toward interest at the start of a loan.
As a result, the amortization raises interest expense above the amount of interest paid for each year of the bond's life in each accounting period.
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