On 1 May 20X7, Bertrum Ltd. purchased $1,000,000 of Fox Corp. 6.2% bonds. The bonds pay semi annual interest each 1 May and 1 November. The market interest rate was 6% on the date of purchase. The bonds mature on 1 November 20X11.

Required:

1. Calculate the price paid by Bertrum.

2. Construct a table that shows interest revenue reported by Bertrum, and the carrying value of the investment, for each interest period to maturity. Use the effective interest method.

3. Assuming the bond is classified as AC, prepare the entries for 20X7 and 20X8 for Bertrum, including adjusting entries at the 31 December year end.

4. Assuming that the bond is classified as AC and that Bertrum sold the bonds on 1 February 20X9, for 99 plus accrued interest. Give the entry to record interest revenue to 1 February, and the entry for the sale.

5. Assume instead that the investment is classified as FVOCI Bond. Repeat requirements 3 and 4 above and prepare the entries for 20X7, assuming that the fair value of the bond was $1,050,000 on 31 December 20X7 and $1,310,000 on December 31 20X8.