On January 1, 2020, RED Company purchased 12% bonds with face amount of P5,000,000 for P5,500,000 which included a transaction cost of P100,000. The bonds provide an effective yield of 10%. The bonds are dated January i, 2020, mature on January 1, 2025 and pay interest annually on December 31 of each year. The bonds are quoted at 115 on December 31, 2020. The entity irrevocably elected to use the fair value option. What amount of interest income should be reported for 2020? P 550,000 P 600,000 P 660,000 P 540,000

On January 1, 2020, RED Company purchased 12% bonds with face amount of P5,000,000 for P5,500,000 which included a transaction cost of P100,000. The bonds provide an effective yield of 10%. The bonds are dated January i, 2020, mature on January 1, 2025 and pay interest annually on December 31 of each year. The bonds are quoted at 115 on December 31, 2020. The entity irrevocably elected to use the fair value option. What amount of interest income should be reported for 2020? P 550,000 P 600,000 P 660,000 P 540,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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