213. Presented here is a partial amortization schedule for Courtney Company who sold €500,000, five year 10% bonds on January 1, 2013 for €520,000 and uses annual straight-line amortization. Which of the following amounts should be shown in cell (ii)? A) €54,000 B) €46,000 C) €52,000 D) €48,000

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Since the face value of the bonds is €500,000 and they were sold for €520,000, the premium is €20,000. Since the bonds have a 10% coupon rate and were sold at a premium, the total annual interest payment is €50,000 (10% x €500,000), and the annual amortization of the premium is €4,000 (€20,000 / 5 years). Therefore, the total annual bond expense is €54,000 (€50,000 + €4,000). Since the company is using annual straight-line amortization, the same amount of the premium is amortized each year, so the amount amortized in year 1 (cell (ii)) would be €46,000 (€20,000 / 5 years).