$6$

Multiple Choice

$3$ points

On January $1,$ Year $1,$ Booker Corporation issued a $$5,000$ face value bond that sold for $90.$ The bond had a five$-$year term and paid $10\%$ annual interest. The company used the proceeds from the bond issue to buy land. The land was leased for $$600$ of cash revenue per year and was sold at the end of the $5$ th year for $$4,200$ cash. The total $($net$)$ amount of liability associated with the bond issue would

always be equal to the face value of the bond payable.

decrease each year as a result of the amortization of the discount.

remain the same each year.

increase each year as a result of the amortization of the discount.