Analyze the impact of amortizing a discount on the financial statements. How does it affect the reported interest expense compared to cash interest payments?

• A. Reported interest expense is higher than cash interest payments due to amortization.
• B. Reported interest expense is lower than cash interest payments due to amortization.
• C. Amortization does not affect reported interest expense.
• D. Reported interest expense equals cash interest payments.

Answer: (A)