On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker's commission of P20,000). Interest is payable annually every December 31. The bonds mature on December 31, 2022. The prevailing market rate for the bonds is 9% at December 31, 2020. If the bonds are classified as FA@FVTPL, the amount to be recognized as fair value adjustment loss in its 2020 profit or loss is O P6,180 O P13.900 O P33,900 O P26.180

On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker's commission of P20,000). Interest is payable annually every December 31. The bonds mature on December 31, 2022. The prevailing market rate for the bonds is 9% at December 31, 2020. If the bonds are classified as FA@FVTPL, the amount to be recognized as fair value adjustment loss in its 2020 profit or loss is O P6,180 O P13.900 O P33,900 O P26.180

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 3, 2024, Oriole Company acquires $410000 of Pharoah Company's 10-year, 10% bonds for $442100 to yield 9%. Interest is payable each December 31. The bonds are classified as held-to-maturity. If Oriole uses the effective-interest method, what amount of interest revenue would be recognized in 2025 for these bonds? $39790 $39680 O $41000 $44210
On January 1, 2020, Pony Company acquired P5,000,000, 12% bonds to be held as finaNcial assets at amortized cost for P5,250,000 plus transaction cost of P124,000. Interest is payable annually on December 31. The bonds amture on January 1, 2025. The effective interest method of amortization is used. The bonds have a 10% effective yield. What is the interest income for the year 2020?
Nash Co. sells $534,000 of 8% bonds on March 1, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. Give entries through December 31, 2021. Prepare a bond amortization schedule using the effective - interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end. ( Round answers to 0 decimal places, e.g. 38,548.) Prepare all of the relevant journal entries from the time of sale until December 31, 2021. (Assume that no reversing entries were made) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places eg. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date 3/1/20 Account Titles and Explanation Debit Credit
Sheridan Company received proceeds of $812000 on 10-year, 8% bonds issued on January 1, 2019. The bonds had a face value of $770000, pay interest annually on December 31, and have a call price of 102. Sheridan uses the straight-line method of amortization. What is the amount of interest expense Sheridan will report with relation to these bonds for the year ended December 31, 2020? O $49000 O $61600 O $64960 $57400
On January 1, 2023, Pronghorn Limited pays $105,753 to purchase $110,000 of Chan Corporation 9% bonds. The market rate of interest at the time was 10%. Pronghorn accounts for this investment at amortized cost using the effective interest method. The bonds mature on January 1, 2028, and interest is payable each July 1 and January 1. Note that the bond is acquired on an interest payment date and there is therefore no accrued interest for Pronghorn to pay on January 1. Pronghorn has an August 31 year end (a) * Your answer is incorrect. Calculate the amortization of the discount per month using the straight-line method. (Round answer to 2 decimal places, eg 125.55) SUPPOR
On July 1, 2020, Sprakenheit Company purchased P500,000 face value Swazzeg Company 8% bonds for P455,000 (with accrued interest) to yield 10%. The bonds were designated as at fair value through profit or loss. The bonds mature on January 1, 2024 and pay interest annually on January 1. On December 31, 2020, the bonds had a market value of P472,500. On February 14, 2021, Sprakenheit sold the bonds for P460,000 plus accrued interest. On its December 31, 2020 statement of comprehensive income, what amount should Sprakenheit report as unrealized gain or loss?
A company issues $25900000, 5.8%, 20-year bonds to yield 6% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $25301326. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2020 balance sheet? (Round answer to 0 decimal place, e.g. 52.) $25309264 $25900000 $25333047 $25317444
On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker’s commission of P20,000). Interest is payable annually every December 31. The bonds mature on December 31, 2022. The prevailing market rate for the bonds is 9% at December 31, 2020. Which statement is correct if the bonds are classified as FA@FVTOCI? a. The amount to be recognized in 2020 profit or loss is P100,000. b. The amount to be reported on the entity’s December 31, 2020 statement of financial position is P1,035,630. c. The amount to be recognized in 2020 other comprehensive income is P33,900. d. None of these
On January 1, 2021, Mega Corporation purchased P1,000,000, 12% bonds for P1,065,000, a price that yields 10%. the bonds pay interest semi-annually every January 1 and July 1 and they mature on January 1, 2025. Mega designates this debt investment at fair value through profit or loss. At December 31, 2021, each P1,000 bond is selling at 105.5. What is the carrying value of the debt investment at December 31, 2021? a.) P1,065,000 b.) P1,055,000 c.) P1,051,163 d.) P1,000,000
On January 1, 2021, Jackie Company issued P8,000,000 8% eight-year bonds. Similar bonds had an effective rate of 8.8%. On yearend, the bonds had a market value quotation of 88. Jackie opted to measure the bonds at fair value. How much is the net effect of bonds on the 2021 Statement of Comprehensive Income? [Indicate whether it is a gain or loss] How much is the discount/premium amortization during 2022? [Indicate whether it is a discount or premium]
On January 1, 2020, Alaska Corporation purchased P1,000,000 10% bonds for P1,051,510 (including broker’s commission of P20,000). Interest is payable annually every December 31. The bonds mature on December 31, 2022. The prevailing market rate for the bonds is 9% at December 31, 2020. If the bonds are classified as FA@AC, the amount to be reported on the entity’s December 31, 2020 statement of financial position is
Mitchell Inc. issued 64, 10%, $1,000 bonds on January 1, 2020, for $70,006. The bonds pay cash interest semiannually each June 30, and December 31, and were issued to yield 8%. The bonds mature December 31, 2025, and the company uses the effective interest method to amortize bond discounts or premiums. On January 1, 2020, Mitchell Inc. elects to account for the bonds using the fair value option. At December 31, 2020, the market rate on the bonds is 9%. Required: 1. The carrying value of the bonds on December 31, 2020 is $ 2. The fair value of the bonds on December 31, 2020 is $ 3. The amount of unrealized holding gain or loss is $ (Fill in the last blank with "gain" if there is an unrealized holding gain or "loss" if there is an unrealized holding loss) Note: Don't round until the final answer. Round the final answer to the nearest dollar.