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On January 1, 2023, Indigo Corporation purchased a $1,300,000 bond issued by ALN Ltd. The bond was due to mature on December 31, 2025, and paid interest at 6% every June 30 and December 31. The market interest rate was 8%. Indigo had both the intention and ability to hold the bond until its maturity date.

On January 1, 2025, Indigo became aware that ALN was experiencing severe financial difficulties. After discussing the situation with ALN and some of the other creditors, Indigo believed that ALN would now be able to repay only $1,170,000 of the original $1,300,000 bond. (The tables in this problem are to be used as a reference for this problem.)

1. Calculate the purchase price of the bond using, a financial calculator or Excel functions. (Round factor values to 5 decimal places, eg. 1.25124 and final answer to 2 decimal places, e.g. 5,275.36.)

2. Calculate the carrying amount of the bond on January 1, 2025, by preparing a bond amortizable table (round answer to 2 decimal places e.g. 5,275.36.)

3. Calculate the revised present value of the bond at January 1,2025 using A-2 and A-4 Tables, a financial calculator or Excel functions. (Round factor values to 8 decimal places, e.g. 1.25124125 and final answer to 2 decimal places, e.g. 5,275.36.)

4. Prepare the journal entry on Indigo's books to record the impairment of the investment, assuming that Indigo follows the incurred loss model. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

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