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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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What is the correct answer to number 1 and 2? Show your solution. 

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
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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