On 1 January 2005, Franco Ltd. purchased $590,000 of Gentron Company 7.00% bonds. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 8% on the date of purchase. The bonds mature on 31 December 2010.

Required: 1. Calculate the price paid by Franco Ltd. (Round time value factor to 5 decimal places. Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) 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
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.)

1. Record the first period revenue. 30th june 2005

2. Record the second period revenue. 31Dec 2005

3. Record the third period revenue. 30 June 2006

4. Record the fourth period revenue. 31 Dec 2006

4. Assume instead that the bond is classified as a FVTPL investment, and the fair value at the end of 2005 was $575,000, and was $585,500 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.)

1. Record the first period revenue. 30 June 2005

2. Record the second period revenue. 31 Dec 2005

3. Record the holding gain/loss on investment for the year ended 2005. 31 Dec 2005

4. Record the third period revenue 30 June 2006

5. Record the fourth period revenue. 31 Dec 2006

6. Record the holding gain/loss on investment for the year ended 2006. 31 Dec 2006

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