"CASE 111 Reporting Bond Liabilities On January 1, 2016, Plywood Homes, Inc., issued 20year, 4 percent bonds having a face value of $1 million. The interest on the bonds is payable semiannually on June 30 and December 31. The proceeds to the company were $975,000 (i.e., on the day they were issued the bonds had a market value of $975,000). On June 30, 2016, the companys fiscal closing date, when the bonds were being traded at 98 , each of the following amounts was suggested as a possible valuation basis for reporting the bond liability on the balance sheet.

$975,625 (proceeds, plus six months straightline amortization)

$1 million (face value)

$1,780,000 (face value plus interest payments)

Question: Evaluate each of the three suggested alternatives for reporting the bond liability on the balance sheet, giving arguments for and against each alternative. Your answer should take the investor and the reporting company into consideration."