On January 1, 2016, Covid Corp., purchased debt securities for cash of P765,540 to be held as financial assets at amortized cost. The securities have a face value of P600,000, and they mature in 15 years. The securities carry fixed interest of 10% that is receivable semiannually, June 30 and December 31. The prevailing market interest rate on these debt securities is 7% compounded semiannually. Requirements: (Present your solutions in good form. You may submit your solutions either on the space provided below or in a separate activity.) 1. The carrying value of the debt securities on December 31, 2016, at amortized cost using the effective interest rate method is? (Rounded to the nearest peso) 2. The interest income to be reported for 2016 using the effective interest rate method is? (Rounded to the nearest peso)
On January 1, 2016, Covid Corp., purchased debt securities for cash of P765,540 to be held as financial assets at amortized cost. The securities have a face value of P600,000, and they mature in 15 years. The securities carry fixed interest of 10% that is receivable semiannually, June 30 and December 31. The prevailing market interest rate on these debt securities is 7% compounded semiannually. Requirements: (Present your solutions in good form. You may submit your solutions either on the space provided below or in a separate activity.) 1. The carrying value of the debt securities on December 31, 2016, at amortized cost using the effective interest rate method is? (Rounded to the nearest peso) 2. The interest income to be reported for 2016 using the effective interest rate method is? (Rounded to the nearest peso)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On January 1, 2016, Covid Corp., purchased debt securities for cash of P765,540 to be held as
financial assets at amortized cost. The securities have a face value of P600,000, and they
mature in 15 years. The securities carry fixed interest of 10% that is receivable semiannually,
June 30 and December 31. The prevailing market interest rate on these debt securities is 7%
compounded semiannually.
Requirements: (Present your solutions in good form. You may submit your solutions either on
the space provided below or in a separate activity.)
1. The carrying value of the debt securities on December 31, 2016, at amortized cost using
the effective interest rate method is? (Rounded to the nearest peso)
2. The interest income to be reported for 2016 using the effective interest rate method is?
(Rounded to the nearest peso)
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