Gander Corp. is a small public company with a December 31 fiscal year-end. At the end of 2011, the company had Si million of excess cash. The board of directors decided that the company should hold the funds until the right business opportunity appeared, rather than pay out the funds to its shareholders and then have to issue shares to obtain the financing later. The board directed management to invest the funds in a diversified portfolio of debt instruments. As a result, on January 1, 2012, management purchased SI million of short-term government bonds, SI million of medium-term government bonds, and $1 million of high-quality corporate bonds. (The amounts are face values, not investment cost.) The following table provides additional information about these investments.

Required:
a. Determine the investment cost of the three investments on January 1, 2012.
b. Prepare amortization schedules for the medium-term government bonds and the corporate bonds. Use a computer spreadsheet to help you do your calculations.
c. For each of the three investments, determine the following amounts for each fiscal year:
- Balance sheet asset;
- Income;
- Other comprehensive income; and
- Cumulative other comprehensive income component of equity.
d. Had Gander classified the medium-term government bonds and the corporate bonds as held-to-maturity financial assets, how much would have been the total amount of income over the five years for each of the type of bonds?
e. I lad Gander classified the medium-term government bonds and the corporate bonds as held-for-trading financial assets, how much would have been the total amount of income over the five years for each of the type of bonds? What would be different under this scenario?

Medium-term government bonds $1,000,000 5% 4% Jan. 1, 2017 Annual Available for sale Short-term government Corporate bonds S1,000,000 3% 3% Jan. 1, 2014 Annual Held to maturity bonds $1,000,000 6% 8% Jan. 1, 20117 Annual Available for sale Face value Coupon rate Yield Maturity Interest frequency Accounting classification Investment cost Market value, Dec. 31, 2012 $985,000 Market value, Dec,2013 $1,000,000 Market value, Dec. sl, Market value, Dec. 31, 2015 Market value, Dec. 31,2016_ $1,040,000 $1,028,000 $1,020,000 1, $1,010,000 $1,000,000 $950,000 $970,000 S1,050,000 $1,010,000 S1,000,000