Harrison Ltd. issued $8,000,000 of bonds payable on 30 April 20X0. The bonds are due on 30 April 20X8 and bear interest at 4.5% per annum, payable every 30 October and 30 April. The bonds were issued to yield 6% per annum. Harrison’s fiscal year ends on 31 December. Harrison uses the effective interest method of amortization.

Calculate the proceeds from issuance.

Calculate the proceeds from issuance if the yield rate is 5% and the bond is issued on 30 October 20X2, still with a maturity date of 30 April 20X8.

Calculate the proceeds from issuance if the yield rate is 10%, and the bond is issued on 30 April 20X1, still with a maturity date of 30 April 20X8.

Assume that on 30 October 20X5 the market rate of interest is 12% for notes of similar risk and maturity.

a. Determine the book value (including unamortized discount/premium) that will be shown on the statement of financial position at that date assuming the bond was issued as in requirement 1.

b. Determine the fair value that will be disclosed in the notes.