Webster Company issues $1,000,000 face value, 6%, 5-year bonds payable on December 31, 2011. Interest is paid semiannually each June 30 and December 31. The bonds sell at a price of 97; Webster uses the straight-line method of amortizing bond discount or premium.[Stop and think: 1) How much is the bond discount or premium? 2) How much discount or premium is amortized every 6 months during the 5-year bond term? And 3) What effect does the bond discount or premium have on interest expense in this example?]

The carrying value of this liability in Webster Company's December 31, 2012, balance sheet is:

A.$1,000,000.

B.$970,000.

C.$976,000.

D.$967,000.