On January 1, 2020 Chicken Wings Company purchased P3,000,000, 8% bonds of Fried Chicken Corporation for an amount that yields 10%. Interest is payable every June 30 and December 31 of the year. The bonds will mature on December 31, 2024. The business model of the entity is to collect the contractual cash flows which represent sole payment of principal and interest. On April 1, 2022, to pay maturing obligations, Chicken Wings Company sold P1,000,000 face value bonds for total proceeds of 104. Additionally, Fried Chicken Corporation is currently financially distressed and after paying the amount due on December 31, 2022 was unable to meet the original terms of the contract. Fried Chicken Corporation arrange for negotiation by lowering the interest rate from 8% to 4% for the remaining terms. How much is the total (net) impact in the profit or loss of the bond transactions for the year 2022?
On January 1, 2020 Chicken Wings Company purchased P3,000,000, 8% bonds of Fried Chicken Corporation for an amount that yields 10%. Interest is payable every June 30 and December 31 of the year. The bonds will mature on December 31, 2024. The business model of the entity is to collect the contractual
How much is the total (net) impact in the profit or loss of the bond transactions for the year 2022?
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