The amortization schedule for a bond issued at a discount has a carrying value that increases over time.Group startsTrue or False
Question
The amortization schedule for a bond issued at a discount has a carrying value that increases over time.
Group starts True or False
Solution
True or False Analysis
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Understanding the Statement: The statement claims that the carrying value of a bond issued at a discount increases over time.
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Key Concept - Amortization of Discounts: When a bond is issued at a discount, it means that its face value is higher than its selling price. Over time, the discount is amortized, meaning the carrying value of the bond increases as the discount is gradually reduced until it reaches its face value at maturity.
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Conclusion: Given that the carrying value of a bond issued at a discount does indeed increase over time as the discount is amortized, the statement is accurate.
Final Answer
True. The carrying value of a bond issued at a discount increases over time.
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