n 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. REQUIREMENT: Prepare journal entries for 2020.
n 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. REQUIREMENT: Prepare journal entries for 2020.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1RE
Related questions
Question
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.
REQUIREMENT:
Prepare
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
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
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning