During the fiscal year ended December $31,2024,$ the City of Johnstown issued $5\%$ general obligation serial bonds in the amount of $$2,000,000$ at $102($$$2,040,000)$ and used $$1,990,000$ of the proceeds to construct a fire station. The $$40,000$ premium was transferred to a debt service fund. The $$10,000$ left in the capital projects fund at the end of the project was later transferred to the debt service fund. The bonds were dated April $1,2024$ and paid interest on October $1$ and April $1.$ The first of $10$ equal annual principal payments was due on April $1,2025.$

How would receipt of the $$40,000$ premium be accounted for?

As an other financing source in the capital project fund

Amortized to interest expenditure in the debt service fund

Both the options are correct.

Neither of the options are correct.