Evaluate the following two statements:
i. interest on bonds must be paid in full even when the corporation operates at a loss.
ii. when bonds are issued at a premium, the annual interest expense reported will be greater than.

I. True. Bond is an corporate's liabilities rather than an equity. Thus, the bond issuance is liable to its bond's holders to pay the promised interest expense on-time and in full amount being promised at the time of issuance regardless of their business's performances.

II. False. When the bonds are issued at a premium, annual interest expense will be lower. The Premium amount will be credited at first and then being allocated through out the bond's life time ( debited). This will reduce the amount of interest expense being recorded during the year of bond's life time.

Explanation:

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