Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
ANSWER THE QUESTION PLS.
Transcribed Image Text:20.On January 1, 2020, Diamond Company purchased P5,000,000 face amount 8% bonds for
P4,562,000 to be held. The bonds were purchased to yield 10% interest. The bond matures on
January 1, 2026 and pays interest annually on December 31. The interest method of amortization
is used. On July 1, 2021, P1,000,000 face value bonds were sold at 105 plus accrued interest.
The bonds have fair market value of 98 and 101 for the years 2020 and 2021 respectively.
How much is gain (loss) from selling the bonds?
a. (279,822)
b. 279,822
c. (230,910)
d. 230,910
21.Refer to the information in Question No. 20. How much is the interest income for the year
2022?
a. 320,000
b. 374,525
c. 379,978
d. 385,975
22. Refer to the information in Question No. 20. Assuming the investment in bonds qualifies to be
accounted as financial assets at fair value through other comprehensive income. How much is
the unrealized gain (loss) at the end of 2019?
a. 381,800
b. (381,800)
C. 281,800
d. (281,800)
23. Refer to the information in Question No. 20. Assuming that Diamond Company chooses the
fair value option in accounting investment in bonds. How much is the carrying amount of the bonds
presented on the Statement of Financial Position for 2021?
a. 5,000,000
b. 5,050,000
c. 4,000,000
d. 4,040,000
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