If the bonds are classified as FA@FVTOCI, what is the amount to be recognized as fair value adjustment loss in the 2020 other comprehensive income of the entity? 2.) If the entity sold the investment on Dec. 31, 2020 at fair value and bonds are classified as FA@FVTOCI, what will be the reclassification adjustment to be reported by the entity?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 2020, Wimp Corporation purchased P2,000,000 10% bonds for P2,051,510 (including broker’s commission of P20,000). Interest is payable annually every December 31. The bonds mature on December 31, 2022. The prevailing market rate for the bonds is 9% at December 31, 2020.

1.) If the bonds are classified as FA@FVTOCI, what is the amount to be recognized as fair value adjustment loss in the 2020 other comprehensive income of the entity?

2.) If the entity sold the investment on Dec. 31, 2020 at fair value and bonds are classified as FA@FVTOCI, what will be the reclassification adjustment to be reported by the entity?

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