On 1 January 2005, Franco Ltd. purchased $400,000 of Gentron Company 5% bonds. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 6% on the date of purchase. The bonds mature on 31 December 2010. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the price paid by Franco Ltd. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount. Round time value factor to 5 decimal places.) Price paid 461,540 $ 2. Assume that the bond is classified as an AC investment Construct a table that shows interest revenue reported by Franco, and the carrying value of the investment, for four interest periods. Use the effective-interest method. (Round your answers to the nearest whole dollar amount.) Period Cash Payment Interest Revenue Amortization Bond Carrying Value $ 461,540 0 1 2 3 4 3. Prepare the entries for the first four interest periods based on your calculations in requirement 2. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Round your answers to the nearest whole dollar amount.) View transaction list View Journal entry worksheet Debit Credit 1 Record the first period revenue. 2 Record the second period revenue. 3 Record the third period revenue. 4 Record the fourth period revenue. 4. Assume instead that the bond is classified as a FVTPL investment, and the fair value at the end of 2005 was $385,000, and was $391,500 at the end of 2006. Prepare the entries for each interest period in 2005 and 2006, and adjust the bond to fair value at the end of each fiscal year. (That is, the bond is not adjusted to fair value at each interest payment date, just at the reporting date.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.) View transaction list 1 Record the first period revenue. 2 Record the second period revenue. 3 Record the holding gain/loss on investment for the year ended 2005. 4 Record the third period revenue Credit 5 Record the fourth period revenue. 6 Record the holding gain/loss on investment for the year ended 2006. Note : = journal entry has been entered Record entry Clear entry View general Journal 5. Show how the bond would be presented on the statement of financial position at the end of 2005 and 2006, if it were (a) AC and (b) FVTPL. (Round your answers to the nearest whole dollar amount.) 2006 2005 |(a) AC investment Investment in Gentron bond (b) FVTPL investment Investment in Gentron bond