Balance of mortgage payable

Reference no: EM13121058

A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for ten years to repay the loan. Which of the following relationships can you expect to apply to the situation?

The balance of mortgage payable at a given balance sheet date will be reported as a long-term liability.

The balance of mortgage payable will remain a constant amount over the ten-year period.

The amount of interest expense will decrease each period the loan is outstanding, while the portion of the annual payment applied to the loan principal will increase each period.

The amount of interest expense will remain constant over the ten-year period.

Reference no: EM13121058

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