On January 1, 2021, KitKat Company received P1,077,200 for P1,000,000 face amount 12% bonds. The bonds were sold to yield 10%. Interest is payable semiannually every January 1 and July 1. The entity has elected the fair value option for measuring the financial liability. On December 31, 2021, the fair value of the bonds is determined to be P1,064,600 due to market and interest factors. 16. What is the carrying amount of the bonds payable on January 1, 2021?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2021, KitKat Company received P1,077,200 for P1,000,000 face amount 12% bonds. The bonds were sold to yield 10%. Interest is payable semiannually every January 1 and July 1. The entity has elected the fair value option for measuring the financial liability. On December 31, 2021, the fair value of the bonds is determined to be P1,064,600 due to market and interest factors.


16. What is the carrying amount of the bonds payable on January 1, 2021?
17. What is the interest expense for 2021?

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