10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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FinanceQ&A LibraryPlease provide solutions and explanation. Thank you so much. 1. Use the following information for the next three questions: On January 1, 20x1, ABC Co. acquired 10%, ₱1,000,000 bonds for ₱827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs ₱80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%. The bonds are to be held under a “hold to collect and sell” business model. Information on fair values is as follows: December 31, 20x1…………………………….98 December 31, 20x2……………………………102 December 31, 20x3……………………………100 How much is the carrying amount of the investment on December 31, 20x1? a. 935,134 b. 1,002,000 c. 980,000 d. 965,443 How much is the unrealized gain (loss) recognized in other comprehensive income on December 31, 20x1? a. 45,866 b. (45,866) c. (37,899) d. 0 How much is the interest income recognized in 20x2? a. 126,999 c. 135,088 b. 130,779 d. 144,388

Please provide solutions and explanation. Thank you so much. 1. Use the following information for the next three questions: On January 1, 20x1, ABC Co. acquired 10%, ₱1,000,000 bonds for ₱827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs ₱80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%. The bonds are to be held under a “hold to collect and sell” business model. Information on fair values is as follows: December 31, 20x1…………………………….98 December 31, 20x2……………………………102 December 31, 20x3……………………………100 How much is the carrying amount of the investment on December 31, 20x1? a. 935,134 b. 1,002,000 c. 980,000 d. 965,443 How much is the unrealized gain (loss) recognized in other comprehensive income on December 31, 20x1? a. 45,866 b. (45,866) c. (37,899) d. 0 How much is the interest income recognized in 20x2? a. 126,999 c. 135,088 b. 130,779 d. 144,388

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Please provide solutions and explanation. Thank you so much.

1. Use the following information for the next three questions:

On January 1, 20x1, ABC Co. acquired 10%, ₱1,000,000 bonds for ₱827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs ₱80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%. The bonds are to be held under a “hold to collect and sell” business model. Information on fair values is as follows:

December 31, 20x1…………………………….98

December 31, 20x2……………………………102

December 31, 20x3……………………………100

How much is the carrying amount of the investment on December 31, 20x1?

a. 935,134

b. 1,002,000

c. 980,000

d. 965,443

How much is the unrealized gain (loss) recognized in other comprehensive income on December 31, 20x1?

a. 45,866

b. (45,866)

c. (37,899)

d. 0

How much is the interest income recognized in 20x2?

a. 126,999 c. 135,088

b. 130,779 d. 144,388

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