APB Opinion No. 21 specifies that, regarding the amortization of a premium or discount on a debt security, the
a. effective-interest method of allocation must be used.
b. straight-line method of allocation must be used.
c. effective-interest method of allocation should be used but other methods can be applied if there is no material difference in the results obtained.
d. par value method must be used and therefore no allocation is necessary.
Answer: effective-interest method of allocation should be used but other methods can be applied if there is no material difference in the results obtained
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