Problem:
Tano issues bonds with a par value of $180,000 on January 1, 2013. The bonds' annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $170,862.
Required:
Question 1: What is the amount of the discount on these bonds at issuance?
Question 2: How much total bond interest expense will be recognized over the life of these bonds?
Question 3: Use the straight-line method to amortize the discount for these bonds
Note: Explain all calculation and formulas.