Please find below an exercise on interest expense and liabilities and their accounting treatment on the appropriate financial statements.

Your company signs a loan contract with a bank (and receives cash) on April 1, 2012 for $10,000,000. The loan will be repaid in full on April 1, 2014 (two-year-loan). Interest expense will be paid in cash on April 1, 2013 and on April 1, 2014; interest rate is 10% per year.

(1) What is the amount of interest expense to be recorded in the income statement in year 2012?

(2) What is the amount of interest expense to be recorded in the income statement in year 2013?

(3) What is the amount of interest expense to be recorded in the income statement in year 2014?

(4) What is the amount of long-term debt related to this debt to be recorded on the balance sheet on December 31, 2012?

(5) What is the amount of long-term debt related to this debt to be recorded on the balance sheet on December 31, 2013?