On December 31, 2016, Fett Corporation issued $980,000, 8%, 10-year bonds for $1,125,824 cash when the market rate of interest was 6%.

On December 31, 2016, Fett Corporation issued $980,000, 8%, 10-year bonds for $1,125,824 cash when the market rate of interest was 6%. The bonds pay interest semi-annually each June 30 and December 31. Fett uses the effective interest amortization method to amortize any premium or discount

E. Answer the following questions:

1. What amount of interest expense will be reported by Vader on the 2017 income statement?

2. What amount of interest expense will be reported by Vader on the 2018 income statement?

3. What is the total interest expense over the life of the bond?

4. If the straight-line method of amortization had been used, what would be the total interest expense over the life of the bond?

F. Show the balance sheet presentation of the bond liability on December 31, 2018: