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1. Champion Inc. acquired 5-year bonds of Samuel Corporation on October 1, 2021. 12 marks Interest is payable semi-annually on April 1 and October 1
1. Champion Inc. acquired 5-year bonds of Samuel Corporation on October 1, 2021. 12 marks Interest is payable semi-annually on April 1 and October 1 of each year. Other information pertaining to this investment follows: Face value of bonds $889,530 Coupon rate on bonds Effective interest rate on bonds Fair value of bonds on September 30,2022 $934,007 Assume that Champion Inc. follows ASPE, and uses the effective interest method and the FV-NI method to account for its bond investment. Champion Inc. has a September 30 year end. Required: 1. Calculate the amount at which Champion Inc. purchased its bond investment on October 1,2021 and prepare the journal entry for the purchase. ( 3 marks) 2. Prepare an amortization schedule for the bond for the period of October 1 , 2021 to October 1 , 2023. (2 marks) 3. Prepare any journal entries required on each of the following dates: (a) April 1, 2022 (1.5 marks) (b) September 30, 2022 (4 marks) 4. Assume that Champion Inc. sold this investment on $934,474 October 1, 2022 for the following amount: Prepare the journal entry to record the disposal of the investment. (1.5 marks)
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