On January 1, 2020, Trisha Company received P1,077,200 for 12% bonds with face amount of P1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every January 1 and July 1. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is P1,064,600. The change in fair value of the bonds is attributable to market factors. 1. What is the carrying amount of the bonds payable on January 1, 2020? a. 1,000,000 b. 1,077,200 500,000 538,600 с. d. 2. What is the interest expense for 2020? а. 120,000 b. 100,000 c. 107,720 d. 129,264 3. What is the gain or loss from change in fair value of the bonds payable for 2020? a. 64,600 gain b. 64,600 loss c. 12,600 gain d. 12,600 loss
On January 1, 2020, Trisha Company received P1,077,200 for 12% bonds with face amount of P1,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every January 1 and July 1. The entity elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds is P1,064,600. The change in fair value of the bonds is attributable to market factors. 1. What is the carrying amount of the bonds payable on January 1, 2020? a. 1,000,000 b. 1,077,200 500,000 538,600 с. d. 2. What is the interest expense for 2020? а. 120,000 b. 100,000 c. 107,720 d. 129,264 3. What is the gain or loss from change in fair value of the bonds payable for 2020? a. 64,600 gain b. 64,600 loss c. 12,600 gain d. 12,600 loss
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6PB: Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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