For the next five (5) questions: On January 1, 2022, when the prevailing market rate on similar instruments was at 7%, DEF Corporation acquired P3,000,000, 10-year bonds of RST Company. Transaction costs of P243,114.27 were incurred in the purchase, resulting to a new effective interest rate of 6%. The bonds will be accounted as a financial asset at fair value through other comprehensive income and will pay interest of 9% every June 30 and December 31. The fair value of the bonds at year- end are presented below: 103 December 31, 2022 December 31, 2023 December 31, 2024 99 101 December 31, 2025 102 December 31, 2026 104 Bonds with face value of P1,000,000 were sold at 101 on June 30, 2024 after interest was collected. What is the total interest income to be recognized on the investment in bonds in 2023?

For the next five (5) questions: On January 1, 2022, when the prevailing market rate on similar instruments was at 7%, DEF Corporation acquired P3,000,000, 10-year bonds of RST Company. Transaction costs of P243,114.27 were incurred in the purchase, resulting to a new effective interest rate of 6%. The bonds will be accounted as a financial asset at fair value through other comprehensive income and will pay interest of 9% every June 30 and December 31. The fair value of the bonds at year- end are presented below: 103 December 31, 2022 December 31, 2023 December 31, 2024 99 101 December 31, 2025 102 December 31, 2026 104 Bonds with face value of P1,000,000 were sold at 101 on June 30, 2024 after interest was collected. What is the total interest income to be recognized on the investment in bonds in 2023?

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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