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  3. a corporation issues for cash $1,000,000 of 8%, 20

A corporation issues for cash $1,000,000 of 8%, 20-year bonds, interest payable annually, at a...

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A corporation issues for cash $1,000,000 of 8%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 10%. The straight-line method is adopted for the amortization of a bond discount or premium. Which of the following is true?a. The amount of unamortized premium decreases from its balance at issuance date to a zero balance at maturity.b. The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity.c. The amount of the annual interest expense gradually decreases over the life of the bonds.d. The amount of the annual interest expense is computed at 8% of the bond carrying amount at the beginning of the year.

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