7. On January 1, 2020, Mariel Company iasued bonds payable with face amount of P8,000,000 and 10% stated interest rate at 95. The entity paid bond isaue cost of P150,000. The bonds have a 5-year term and interest is payable annually every December 31. The entity elected the fair value option. On December 31, 2020, the fair value of the bonds is 105. It is reliably determined that the fair value increase comprised P150,000 attributable to eredit risk and the remainder attributable to change in the market interest rate. 1. What is the interest expense for 2020? 2. What amount of gain or loss should be recognized in profit or loss for 2020 to conform with the fair value option? 3. What is the carrying amount of the bonds payable on December 31, 2020? 4. Prepare journal entries for 2020.
7. On January 1, 2020, Mariel Company iasued bonds payable with face amount of P8,000,000 and 10% stated interest rate at 95. The entity paid bond isaue cost of P150,000. The bonds have a 5-year term and interest is payable annually every December 31. The entity elected the fair value option. On December 31, 2020, the fair value of the bonds is 105. It is reliably determined that the fair value increase comprised P150,000 attributable to eredit risk and the remainder attributable to change in the market interest rate. 1. What is the interest expense for 2020? 2. What amount of gain or loss should be recognized in profit or loss for 2020 to conform with the fair value option? 3. What is the carrying amount of the bonds payable on December 31, 2020? 4. Prepare journal entries for 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:7.
On January 1, 2020, Mariel Company issued bonds payable
with face amount of P8,000,000 and 10% stated interest rate
at 95. The entity paid bond issue cost of P150,000. The bonds
have a 5-year term and interest is payable annually every
December 31.
The entity elected the fair value option. On December 31,
2020, the fair value of the bonds is 105.
It is reliably determined that the fair value increase
comprised P150,000 attributable to credit risk and the
remainder attributable to change in the market interest rate.
1. What is the interest expense for 2020?
2. What amount of gain or loss should be recognized in profit
or loss for 2020 to conform with the fair value option?
3. What is the carrying amount of the bonds payable on
December 31, 2020?
4. Prepare journal entries for 2020.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
Expert Answers to Latest Homework Questions
Q: Hi Expert Answer me Details given in below section
Q: Please correct answer and don't used hand raiting
Q: Jarvis inc.reported net income..accounting question
Q: Under what circumstances does real-time accounting become essential?
Q: What is the wages?
Q: Healthcare and quality determinate: Conclusion: Explain the anticipated results and time frame.
Q: Healthcare and quality determinate: Policy/Legislation: Identify existing health policy/legislation…
Q: Health Care and quality determinate: identify 3–5 actions that could impact this disparity and lead…
Q: Helathcare and quality determinant: describe how this disparity impacts the health of the community.
Q: Tutor help needed solve this and NO AI Use
Q: Calculate the error in Arduino
1-Timer
2-counter
whene:
f=50Hz
T=1/f=1/50= 20,000 μ.s…
Q: Lee's pension trust reported...account question
Q: Answer me
Q: Please correct answer and don't used hand raiting
Q: What makes forensic accounting distinct from regular auditing?
Q: Assignment activity and guidance
Steel Framework Beam Analysis report
You are presented with the…
Q: tutor please give true answer No AI use Strictly
Q: Present the total concession revenue.
Q: answer this Question of general accounting
Q: Starlight Cinema
Q: Determine the reactions using the Method of Consistent Deformations (the force method).*(Structural…