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 10 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 10-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 10-year period.