ABC Company issues a \($5,000,000,\) 8 1/2% bond on 1 October 20X4. At this time, market interest rates are in the range of 8%. The bond had a 20-year life from 1 October 20X4, and paid interest semi¬ annually on 31 March and 30 September.

Required:

1. Calculate the proceeds that would be raised on bond issuance.

2. Prepare an amortization table using the effective-interest method of amortization. Com¬ plete the first four payments only.

3. Prepare journal entries for 20X4 and 20X5, using the effective-interest method. ABC has a 31 December fiscal year-end.

4. Repeat requirements 2 and 3 using straight-line amortization.

5. Which method of amortization is required under IFRS? Why?