Exercise $14-29($Algo$)$ Reporting bonds at fair value $[$LO$14-6]$

Federal Semiconductors issued $12\%$ bonds, dated January $1,$ with a face amount of $$890$ million on January $1,2024.$

The bonds sold for $$827,052,405$ and mature on December $31,2043(20$ years$).$

For bonds of similar risk and maturity the market yield was $13\%.$

Interest is paid semiannually on June $30$ and December $31.$

Federal determines interest at the effective rate.

Federal elected the option to report these bonds at their fair value.

On December $31,2024,$ the fair value of the bonds was $$810$ million as determined by their market value in the over$-$the$-$counter market.

Assume the fair value of the bonds on December $31,2025,$ had risen to $$816$ million.

Required:

Complete the below table to record the following journal entries.

$1.$ & $2.$ Prepare the journal entries to record interest on June $30,2024,$ December $31,2024,$ and adjust the bonds to their fair value for presentation in the December $31,2024$ balance sheet, and record interest on June $30,2025,$ December $31,2025,$ and adjust the bonds to their fair value for presentation in the December $31,2025,$ balance sheet. Federal determined that none of the change in fair value in $2024$ was due to a decline in general interest rates and one$-$half of the increase in fair value in $2025$ was due to a decline in general interest rates.