Inmet Mining Corporation issued bonds with a par value of $90,000 on January 1, 2014. The annual contract rate on the bonds is 8%, and the interest is paid semi-annually. The bonds mature after three years. The annual market interest rate at the date of issuance was 10%, and the bonds were sold for $85,431.
a. What is the amount of the original discount on these bonds?
b. How much total bond interest expense will be recognized over the life of these bonds?
c. Present an amortization table for these bonds; use the effective interest method of allocating the interest and amortizing the discount.