Determine the amount of interest to be included in income in Years 1, 2, and 3 for each of the following situations. Income tax reference: ITA 12(1)(c), 12(3), (4), (11).
• Percel Ltd. has a December 31 year end. In Year 1, Percel purchased a $10,000 bond on its issue date of November 1.The bond pays interest at 6% compounded annually. Percel will receive interest when the bond matures on October 31,Year 3.
• Debra purchased a $10,000 bond on its issue date, November 1, Year 1.The bond pays interest at 6%, compounded annually. Debra will receive the interest when the bond matures on October 31,Year 3.