On January $01,2024,$ ABC Corp. purchased XYZ Company bonds when the market

interest rate was $6\%.$ The XYZ bonds had a $$600,000$ maturity value, paid $4\%$

interest semi$-$annually on June $30$th and December $31$st$,$ and had a six year life. ABC

Corp.$\text{'}$s year$-$end is at December $31.$

ABC Corp uses IFRS for reporting purposes and has classified this investment as an

Amortized Cost $($AC$)$ investment for financial reporting purposes.

Please refer to the PV tables provided in the course

Required:

a$)$ Calculate the price paid by ABC Corp. for the bonds.

b$)$ Prepare the journal entry to record the purchase of the bonds.

c$)$ Complete the table below that shows the interest revenue, carrying value of

bonds, using the effective interest method.

d$)$ Provide the journal entry to record the interest revenue on June $30,2024.$

e$)$ Explain the major difference in accounting treatments between AC investments

and FVOCI Investments $($ie: what do we need to do for FVOCl investments that we

don't need to do for AC investments$)-$ no calculations required for this part.On January $01,2024,$ ABC Corp. purchased XYZ Company bonds when the market interest rate was $6\%.$ The XYZ bonds had a $$600,000$ maturity value, paid $4\%$ interest semi$-$annually on June $30$th and December $31$st$,$ and had a six year life. ABC Corp.$\text{'}$s year$-$end is at December $31.$

ABC Corp uses IFRS for reporting purposes and has classified this investment as an Amortized Cost $($AC$)$ investment for financial reporting purposes.

Please refer to the PV tables provided in the course

Required:

a$)$ Calculate the price paid by ABC Corp. for the bonds.

b$)$ Prepare the journal entry to record the purchase of the bonds.

c$)$ Complete the table below that shows the interest revenue, carrying value of bonds, using the effective interest method.

Period

Cash Payment

Interest Revenue

Amortization

Carry Value

$0$

a$.$

b$.$

c$.$

d$.$

$1$

e$.$

f$.$

g$.$

h$.$

$2$

i$.$

j$.$

k$.$

l$.$

$3$

m$.$

n$.$

o$.$

p$.$

d$)$ Provide the journal entry to record the interest revenue on June $30,2024.$

e$)$ Explain the major difference in accounting treatments between AC investments and FVOCI Investments $($ie: what do we need to do for FVOCI investments that we don't need to do for AC investments$)-$ no calculations required for this part.