Bond: Bond is a financial instrument which generates the fixed income to the investors within a specified period of time. The income generated on the bonds is known as interest amount.
Amortization of Bonds: When bonds are issued at discount or premium, the discounted or premium value is amortized from the contractual interest over a period of time and comes under the income statement.
Effective Interest Rate Method: In effective interest rate method, the discounted or premium amount of the bond is amortized at a rate over a period and comes under the income statement.
To Explain: The advantages of effective interest rate method discussed by Mr. K.
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