Several Years Ago, Durham City Issued $1 Million in Zero

Multiple Choice

Several years ago, Durham City issued $1 million in zero coupon bonds due and payable in 2026. The bonds were sold at an amount to yield investors 6 percent over the life of the bonds. During the current year, how much in interest expenditures should Durham City recognize related to these bonds?

A) Difference between the present value of the bonds at the beginning of the period and the present value of the bonds at the end of the period.
B) Face amounts of bonds times 6 percent.
C) Book value of bonds times 6 percent.
D) None.