On Jan. 1, 2021, an entity bought investment in bonds and classified it as an investment at amortized cost. It has a total face value of P5,000,000 and an acquisition cost of P5,088,700. It pays an interest rate of 6%, to be paid semiannually every June 30 and Dec. 31. It matures on Dec. 31, 2024. The acquisition resulted to an effective interest rate of 5.5%. On Dec. 31, 2021, the bonds have a total fair value of P5,010,000. Identify the following: a. Interest income for the year b. Unrealized Holding Gain/Loss through P/L for year 2021 c. Investment in Bonds as of Dec. 31, 2021
On Jan. 1, 2021, an entity bought investment in bonds and classified it as an investment at amortized cost. It has a total face value of P5,000,000 and an acquisition cost of P5,088,700. It pays an interest rate of 6%, to be paid semiannually every June 30 and Dec. 31. It matures on Dec. 31, 2024. The acquisition resulted to an effective interest rate of 5.5%. On Dec. 31, 2021, the bonds have a total fair value of P5,010,000. Identify the following: a. Interest income for the year b. Unrealized Holding Gain/Loss through P/L for year 2021 c. Investment in Bonds as of Dec. 31, 2021
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On Jan. 1, 2021, an entity bought investment in bonds and classified
it as an investment at amortized cost. It has a total face value of
P5,000,000 and an acquisition cost of P5,088,700. It pays an interest
rate of 6%, to be paid semiannually every June 30 and Dec. 31. It
matures on Dec. 31, 2024. The acquisition resulted to an effective
interest rate of 5.5%. On Dec. 31, 2021, the bonds have a total fair
value of P5,010,000.
Identify the following:
a. Interest income for the year
b. Unrealized Holding Gain/Loss through P/L for year 2021
c. Investment in Bonds as of Dec. 31, 2021
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