Roland Garment Inc. is a private company that uses ASPE for financial reporting. On 1 April, 20X5 Roland Garment Inc. issued bonds with the following characteristics:
• Bond date: January 1, 20X5
• Bond term: 10 years
• Proceeds on issuance: $980,500 plus accrued interest
• Future value: $1,000,000
• Stated rate: 6%
• Interest payment dates: June 30 and December 31
• Bond discount/premium amortization: straight-line

Required:
1. Explain the implication on bond amortization of the bond date and issue date being different.
2. Explain how accrued interest is treated when bonds are sold between interest dates.
3. How much is the initial discount on bonds payable? What liabilities are recorded at issuance?
4. How much interest is recorded on the first payment date? How much is credited to discount on bonds payable?
5. Show how the bond would be reported on the statement of financial position as at 31 December 20X6.
6. Compared to effective interest amortization, what pattern in interest expense do we see with straight line amortization?
7. Why do you think Roland Garment Inc. uses straight-line amortization rather than effective interest amortization?
8. If Roland Garment Inc. incurred $100,000 of debt issuance costs, how would these be handled?