On 31 December 2018, Clary Berhad issued 4,000,000 five-year bond at RM1.00 par value each at an issue price of 90 cents each. The bond carries a coupon interest rate of 6% and interest is payable on 31 December each year. Cost of issuing bond, which included underwriting fees, totaled RM200,000. The prevailing market interest rate for similar class bonds on 31 December 2018 was 10%. Clary Berhad decided to account for the bond as a financial liability at amortised cost. 

Required: 

i. Determine the carrying amount of the bond on initial recognition, if Clary Bhd's policy is to measure the bond at fair value through profit or loss. 

ii)Determine the carrying amount of the bond on initial recognition, if Clary Bhd's policy is to measure the bond at amortised cost model.

iii. The effective interest rate is determined as 9.9512%, show the journal entries to record the issuance of bond on 31 December 2018 and the transactions for the year ended 31 December 2020 using the amortised cost model.

iv. At 31 December 2020, after the interest payment was made, the market interest rate drop to 6%. Calculate the fair value of the outstanding liabilities at 31 December 2020 and discuss how the journal entries would be affected by the changes in the market interest rate.