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Definition

Straight-line method of amortization

Straight-line method of amortization is a method of amortizing bond discount or bond premium that results in allocating the same amount to interest expense in each interest period. The straight-line method of amortization results in a constant amount of amortization and interest expense per period.

The formula for determining bond premium amortization under the straight-line method is:

Bond premium ÷ Number of interest Periods = Bond Premium Amortization

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