On 1 January 2020, an entity purchased a debt instrument at its face value of P1,000,000. The contractual term is ten years with an annual coupon of 6%. On 31 December 2020, the fair value of the instrument decreases to P955,000. 12- month expected credit losses as determined under the impairment model are P25,000. The amount to be recognized in P/L assuming the investment is classified as FVTOCI is?
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- At December 31, 2020, the available-for-sale debt investment for Zorro Community Bancorp has amortized cost of $268,000 and fair market value of $273,500. Securities fair value adjustment beginning balance of the period is Dr. 5,400. Assume the available-for-sale debt securities investment is the only item that affects other comprehensive income (OCI) and accumulated other comprehensive income (AOCI) for Zorro. At what amount should other comprehensive income (OCI) be reported on the comprehensive income statement of Zorro for fiscal year 2020? $5,400 O $100 O $273,500 O $268,000 O $5,500On September 1, 2020, SMD Company borrowed P5,000,000, 10%interest-bearing note due in five years. On December 31, 2020, the fairvalue of the note is determined to be P4,350,000. The entity electedirrevocably the fair value option in measuring the note payable. Whatamount of gain/loss from change in fair value of the note payable shouldbe reported for 2020? A. P1,250,000 gainB. P1,250,000 lossC. P650,000 gainD. P650,000 lossOn January 1, 2019, Peter Corporation purchased a debt instrument at its face value of P3,000,000. The term of the contract is 15 years with an annual coupon of 5%. On December 31, 2019, the fair value of the instrument decreases to P2,955,000. 12-month expected credit losses are P30,000. Based on the above data, determine the net amount to be recognized in 2019 profit or loss and the amount to be reported on the December 31, 2019 Statement of Financial Position if the debt instrument is classified as: a. FA@AC* b. FA@FVTOCI * c. FA@FVTPL* *amount to presented in profit or loss and SFP respectively
- At January 1, 2021, Brant Cargo acquired equipment by issuing a five-year, $150,000 (payable at maturity), 4% note. The market rate of interest for notes of similar risk is 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:1. to 3. Prepare the necessary journal entries for Brant Cargo 1. Record the purchase of equipment. January 01, 2021 2. Record the interest expense. December 31, 2021 3. Record the interest expense. December 31, 2022An entity purchased 4-year debt instruments with a face value of P10,000,000 on January 1, 2019 to collect contractual cash flows that are solely payments of principal and interest. Interest is paid annually at a nominal rate of 10% that is paid every December 31. The following information is provided as follows: Date Effective Rate without Transaction Cost Effective Rate with Transaction Cost 01/01/2019 12% 13% 12/31/2019 14% 14.50% 12/31/2020 11% 11.50% 12/31/2021 9% 9.50% 12/31/2022 10.5% 11% Requirements: What is the initial carrying amount of the bond investment? What is the 2020 interest income? What is the December 31, 2020 carrying amount? If the entity changes its business model in 2020 to both collect contractual cash flows and to sell the financial asset, what is the unrealized gain or loss in equity on December 31, 2021? If the entity changes its business model in 2020 to both collect contractual cash flows and to sell the financial asset, what is the…The entity has an unsecured overdraft of R20000 at prospect Bank that carries an interest rate of 22% per annum. In which one of the following statement will this item be shown? A.Statement of financial position as a current liability B.Statement of financial position as a non current liability C.Statement of income and expenditure as finance costs C.Statement of financial position as current asset
- On January 1, 2021, an entity purchased marketable equity securities for P5,000,000. The equity securities qualify as a financial asset held for trading. The entity also paid P50,000 as commission to the broker. At year-end, the trading securities have a fair value of P6,000,000. The increase in fair value should be recorded with: a.A credit to Financial asset - FVPL, P1,000,000 b.A debit to Unrealized gain - OCI, P1,000,000 c.A debit to Financial asset - FVPL, P1,000,000 d.A debit to Unrealized gain - P/L, P1,000,000On April 1, 2019, Padayon Co. acquired a 5-year bond with a face value of P1,200,000 and stated interest of 10% per year payable annually on December 31. The bonds were acquired to yield 12%. The bonds are to be appropriately classified as financial asset at amortized cost.What is the carrying value of the investment as of March 31, 2020? * a. 1,116,375 b. 1,117,716 c. 1,127,104 d. 1,140,515An entity purchased 4 year debt instruments with a face value of P15,000,000 on January 1, 2019 to collect contractual cash flows that are solely payments of principal and interest and to sell the financial asset. Interest is paid annually at a nominal rate of 8% that is paid every December 31. The following information is provided as follows: Date Effective Rate without Transaction Cost Effective Rate with Transaction Cost 01/01/2019 8.5% 9% 12/31/2019 10% 10.5% 12/31/2020 13% 13.5% 12/31/2021 12% 12.5% 12/31/2022 11% 12% Requirements: What is the initial carrying amount of the bond investment? What is the December 31, 2019 carrying amount of the bond investment? What is the 2020 interest income? What is the cumulative unrealized gain/loss in equity on December 31, 2020? How much is the 2020 unrealized gain recognized in the statement of comprehensive income? If the entity changes its business model in 2020 to collect contractual cash flows only, what is the…
- . On December 31, 2019, Sinigang Company purchased debt investments at amortized cost, P3,000,000 serial bonds with a nominal rate of 10% and effective rate at that time is 13%. Bonds with a face value of P1,000,000 mature on December 31, 2020 and every December 31 thereafter. Use 3 decimal places for PV factors. What is the carrying amount of the debt investment on December 31, 2020?A. P1,923,212B. P2,852,400C. P2,923,212D. P3,000,000On January 1, 2018, an entity purchased bonds with face amount of P5,000,000. The entity paid P4,500,000 plus transaction cost of P168,600. The bonds mature on December 31, 2020 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds were quoted at 105 on December 31, 2018 and 110 on December 31, 2019.The business model in managing the financial asset is to collect contractual cash flows that are solely payments of principal and interest and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2019, the entity changed its business model to collect only contractual cash flows. On December 31, 2020, the bonds are quoted at 115 and the market interest rate is 10%. find the following: 1. What amount of unrealized gain should be reported as component of OCI in the statement of comprehensive income for 2018? 2. What amount of unrealized gain should be reported as component of OCI in the statement of…Happy Sdn Bhd purchased a debt instrument on 1 January 2023 at its fair value of RM5 million. The face value of the instrument was RM12 million with an interest rate of 2.35%. The instrument will mature in three years’ time with a redemption value of RM6.25 million. The market interest rate was 10%. Transaction cost amounted to RM400,000. The directors wish to measure this transaction at amortised cost using the effective interest rate method as it intends to hold the financial instrument to maturity. Required: Discuss the accounting treatment in accordance with the relevant financial reporting standards and where necessary, show how it should be disclosed in the financial statements of Happy Sdn Bhd for the year ended 31 December 2023. Please give calculation in details step by step.