1. On January 1, 2022, Davao Company borrowed P4,000,000 on a 6% 4 year interest-bearing note. The net proceeds from the borrowing amounted to P3,667,600. Interest is payable annually every December 31. The entity elected the fair value option. O December 31, 2022, the bonds are qoutec at 95. What amount should be reported as interest expense for 2022? O 240,000 O 120,000 O292,208 O220,256
1. On January 1, 2022, Davao Company borrowed P4,000,000 on a 6% 4 year interest-bearing note. The net proceeds from the borrowing amounted to P3,667,600. Interest is payable annually every December 31. The entity elected the fair value option. O December 31, 2022, the bonds are qoutec at 95. What amount should be reported as interest expense for 2022? O 240,000 O 120,000 O292,208 O220,256
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
What is the correct answer to number 1 and 2? Show your solution.

Transcribed Image Text:1. On January 1, 2022, Davao Company
borrowed P4,000,000 on a 6% 4 year
interest-bearing note. The net proceeds
from the borrowing amounted to
P3,667,600. Interest is payable annually
every December 31.
The entity elected the fair value option. On
December 31, 2022, the bonds are qouted
at 95.
What amount should be reported as
interest expense for 2022?
240,000
120,000
292,208
220,256
Using the same information from the
previous question: (1)
What amount should be reported as gain
or loss from change in fair value for 2022?
322,400 gain
322,400 loss
122,400 gain
122,400 loss
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