Acorporation issues for cash $1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 12%. the straight-line method is adopted for the amortization of bond discount or premium. which of the following statements is true?
a. the bonds will be issued at a premium. b. the amount of the annual interest expense is computed at 10% of the bond carrying amount at the beginning of the year. c. the amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity. d. the amount of the annual interest expense gradually decreases over the life of the bonds.