On Jan. 1, 2021, an entity bought an investment in bonds with a face value of P3,000,000 for P2,946,500. The investment was recorded as a financial asset at fair value through OCI. It pays an interest rate of 7% to be paid every Dec. 31. It matures on Dec. 31, 2022. On Dec. 31, 2021, the bonds have a total fair value of P2,970,000. Provide the answer for the following: a. Investment in Bonds as of Dec. 31, 2021 b. If in 2021, there was a change in business model to holding the investment until maturity only, what is the compound journal entry to reclassify the asset and update relevant accounts.
On Jan. 1, 2021, an entity bought an investment in bonds with a face value of P3,000,000 for P2,946,500. The investment was recorded as a financial asset at fair value through OCI. It pays an interest rate of 7% to be paid every Dec. 31. It matures on Dec. 31, 2022. On Dec. 31, 2021, the bonds have a total fair value of P2,970,000. Provide the answer for the following: a. Investment in Bonds as of Dec. 31, 2021 b. If in 2021, there was a change in business model to holding the investment until maturity only, what is the compound journal entry to reclassify the asset and update relevant accounts.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On Jan. 1, 2021, an entity bought an investment in bonds with a
face value of P3,000,000 for P2,946,500. The investment was
recorded as a financial asset at fair value through OCI. It pays an
interest rate of 7% to be paid every Dec. 31. It matures on Dec. 31,
2022. On Dec. 31, 2021, the bonds have a total fair value of
P2,970,000.
Provide the answer for the following:
a. Investment in Bonds as of Dec. 31, 2021
b. If in 2021, there was a change in business model to holding the investment until maturity only, what is the compound
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