How would the carrying value of bonds payable change over time for bonds issued at a discount and for bonds issued at a premium?

A) Decrease for bonds issued at a discount and decrease for bonds issued at a premium.

B) Decrease for bonds issued at a discount and increase for bonds issued at a premium.

C) Increase for bonds issued at a discount and decrease for bonds issued at a premium.

D) Increase for bonds issued at a discount and increase for bonds issued at a premium.

Answer: C

The carrying value, using the effective interest method, would increase each year:

A) If the bonds were sold at a discount.

B) If the bonds were sold at a premium.

C) If the bonds were sold at either a discount or a premium.

D) The carrying value of bonds will never increase.

Answer: A

The carrying value, using the effective interest method, would decrease each year:

A) If the bonds were sold at a discount.

B) If the bonds were sold at a premium.

C) If the bonds were sold at either a discount or a premium.

D) The carrying value of bonds will never decrease.

Answer: B