Highlight Reel Inc. is a start-up sports video processing company that sells indexed video clips to media companies so they can quickly add the clips to stories they publish. HRI hopes to go public in a few years, and so although the company reports under ASPE, the financial statements are prepared using policies that would also be acceptable under IFRS.

In order to expand operations, HRI needs to invest in technology and additional staff. The CFO secured a 7 year $700,000 5% note payable from a group of private investors. However, just before the deal closed on April 1, 2020, COVID restrictions were put in place, causing uncertainty and disarray in professional sports schedules. The investors balked at the last minute, demanding a higher interest rate. Ultimately HRI agreed to a 8% yield. The notes pay interest semi-annually on September 30 and March 31 each year. HRI has a March 31 year end.

1. Provide the journal entries to record the notes at inception and at the first interest payment date.
2. Assume instead that SVC elected to use the straight-line approach for recording interest/amortizing the discount. What amount of interest expense would SVC record on the note at the first interest payment date on September 30, 2020?
3. Why does ASPE allow the straight-line approach when IFRS doesn't?
4. In January 2021, an effective vaccine was discovered for COVID-19. Distribution and uptake of the vaccine followed rapidly, resulting in an unprecedented rebound of economic activity. As a result, SVC was able to buy back $300,000 worth of the note at par on April 1, 2021. Show the journal entry to record the buyback. (Remember that SVC's accounting is based on the acceptable-to-IFRS approach).