Response to the following questions:
1. Distinguish between bond premiums or discounts and bond issue costs.
2. Why does the recorded amount of interest expense for the first interest payment differ from the expense recorded for other interest payments when bonds are issued between interest payment dates?
3. What two methods may a company use to allocate a premium or discount over the life of a bond issue? Briefly describe each method.
If possible, please give examples to better understand your response.