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On 1 January 20X8, Sam Ltd. purchased $3,000,000 of six-year, Sung Ltd. 5.1% bonds. The bonds pay semi-annual interest each 30 June and 31 December.
On 1 January 20X8, Sam Ltd. purchased $3,000,000 of six-year, Sung Ltd. 5.1% bonds. The bonds pay semi-annual interest each 30 June and 31 December. The market interest rate was 6% on the date of purchase. Sam Ltd. is a private company that complies with ASPE and uses straight-line amortization.
Required:
- Calculate the price paid by Sam Ltd.
- Construct a table that shows interest revenue reported by Sam and the carrying value of the investment for four interest periods.Use the straight-line method
- Give entries for the first four interest periods based on your calculations in requirement 2.
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