On January 1, 2020, Amev Ltd., an IFRS company, acquires a 3%, 5-year, bond at par for

$1,150,000, which it intends to hold and collect the contractual cash flows of principal and interest. At year-end, management has determined that there is no significant increase in credit risk, but there is a 1% chance that the company will not collect 15% of the bond face value in the next 12 months.

Required: Determine the investment’s classification and prepare the year-end journal entry. What is the carrying value of the bond?