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Unformatted text preview: emiums and discounts may be amortized using the straight-line method as
illustrated in paragraph 11. However, the preferred method is the effective interest
method. This method computes bond interest using the effective yield at which the bonds
are issued. More specifically, interest cost for each period is the effective interest rate
multiplied by the carrying value (book value) of the bonds at the start of that period. The
effective interest method is best accomplished by preparing a Schedule of Bond Interest 14-5...
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- Spring '10