On January 1, 2020, Liam Company purchased bonds with face amount of P10,000,000 for P10,515,000. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and to sell the bonds in the open market. The entity has not elected the fair value option of measuring financial assets. The bonds mature on December 31, 2022 and pay 10% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021. What amount of unrealized loss should be reported as component of other comprehensive income on December 31, 2021?
On January 1, 2020, Liam Company purchased bonds with face amount of P10,000,000 for P10,515,000. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and to sell the bonds in the open market. The entity has not elected the fair value option of measuring financial assets. The bonds mature on December 31, 2022 and pay 10% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021. What amount of unrealized loss should be reported as component of other comprehensive income on December 31, 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2020, Liam Company purchased bonds with face amount of P10,000,000 for P10,515,000. The business model of the entity in managing the financial asset is to collect contractual cash
flows that are solely payment of principal and interest and to sell the bonds in the open market.
The entity has not elected the fair value option of measuring financial assets.
The bonds mature on December 31, 2022 and pay 109ó interest annually on December 31 each year with 8% effective yield.
The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021.
What amount of unrealized loss should be reported as component of other comprehensive income on December 31, 2021?
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