Newton Company Issued Its $1,000,000,7%,ten-Year Bonds to the Public on January

Essay

Newton Company issued its $1,000,000,7%,ten-year bonds to the public on January 1,2019.The bonds pay interest annually,beginning on December 31,2019.Newton Company received $1,154,420 in cash at the issuance of the bonds.The market rate of interest when the bonds were issued was 5%.Newton Company has a December 31 year-end.Assume that no adjusting journal entries have been made during the year.
A.Compute the amount of the premium that Newton Company should amortize on December 31,2019,assuming the effective-interest method is used.
B.Compute the amount of the premium that Newton Company should amortize on December 31,2019,assuming the straight-line method is used.
C.Which method above is theoretically the better method to use for amortizing a bond premium?