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The interest expense is amortized over the twenty periods during which interest is  paid. Amortization of the discount may be done using the straight-line or the  effective interest method. Currently, generally accepted accounting principles  require use of the effective interest method of amortization unless the results  under the two methods are not significantly different. If the amounts of interest  expense are similar under the two methods, the straight-line method may be  used. The  straight-line method  of allocating the discount to interest expense (also  called  amortization  of the discount) spreads the $623 of discount evenly over 
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This note was uploaded on 12/25/2011 for the course FIN 3312 taught by Professor Staff during the Spring '08 term at Texas State.

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