on December 31, 2023 and carry a 13% interest rate. Interest is receivable annually on December 31. The bonds were initially recorded at amortized cost. On June 30, 2020, one-half of the bonds were sold for P1,595,000 plus accrued interest. After the disposal, the  company changed its business model for managing its financial assets and is now actively trading its portfolio. At December 31, 2020, the bonds were quoted at 101.  What is the gain on the sale of the bond investment? A. P95,000 B. P54,291 C. P49,250 D. P41,000

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.