On January 1, 2020, Aguilar Corporation purchased bonds with a face value of P4,000,000 for P3,649,600 in order to collect contractual cash flows that are solely payments of principal and interest. The bonds are purchased to yield 10% interest. The nominal interest rate on the bonds is 8% payable annually every December 31. On December 31, 2021, as a result of a change in the business model for managing financial assets, the entity decided to reclassify the bonds from amortized cost to fair value. On that date, the carrying amount of the bond investment is P3,744,016 after discount amortization using the effective interest method. The market value of the bonds on January 1, 2015, is 10%. Requirements: 1. What if, initially, the investment is classified at FVTPL, then subsequently changed it to FVTOCI, prepare the necessary journal entries to record the transactions. Assume that the bond is for 5 years on the date of acquisition.
On January 1, 2020, Aguilar Corporation purchased bonds with a face value of P4,000,000 for
P3,649,600 in order to collect contractual
The bonds are purchased to yield 10% interest. The nominal interest rate on the bonds is 8% payable
annually every December 31.
On December 31, 2021, as a result of a change in the business model for managing financial assets,
the entity decided to reclassify the bonds from amortized cost to fair value. On that date, the carrying
amount of the bond investment is P3,744,016 after discount amortization using the effective interest
method. The market
Requirements:
1. What if, initially, the investment is classified at FVTPL, then subsequently changed it to FVTOCI, prepare the necessary
Step by step
Solved in 2 steps
