Bond Issued ata Premium On January 1, Emperor Corporation issued $400,000 of 16-year bonds with a stated interest rate of 5 percent. Interest is paid at the end of each year. The current market rate for similarly rated bonds at the time of issue was 4 percent and Emperor received $446,610 when the bonds were issued. Assuming the effective-interest method of amortization is used in computing interest expense:

a. What amount of interest expense will Emperor report for the first year?

b. Prepare a bond interest and amortization table for the first four years the bonds are outstanding, as illustrated in Exhibit 11-6.

c. What is the book value of the bonds at the end of the fourth year?