On January 1, 2021, STUDY HARDER Company purchased 9% bonds with face amount of P6,0 The bonds mature on January 1, 2026 and were purchased for P5,550,000 to yield 11%. The classified the bonds as held for trading and interest is payable annually every December 31. Th provided the following information about fair value of the bonds and effective rate: Fair Value Effective Rate December 31, 2021 December 31, 2022 5,450,000 6.150,000 12% 8% On December 31, 2022, the entity changed the business model for this investment to collect con cash flows composed of principal and interest. On January 1, 2023, the fair value of the bonds At th olegsifieotion dete bow rSuch ie the amium dieooun2
On January 1, 2021, STUDY HARDER Company purchased 9% bonds with face amount of P6,0 The bonds mature on January 1, 2026 and were purchased for P5,550,000 to yield 11%. The classified the bonds as held for trading and interest is payable annually every December 31. Th provided the following information about fair value of the bonds and effective rate: Fair Value Effective Rate December 31, 2021 December 31, 2022 5,450,000 6.150,000 12% 8% On December 31, 2022, the entity changed the business model for this investment to collect con cash flows composed of principal and interest. On January 1, 2023, the fair value of the bonds At th olegsifieotion dete bow rSuch ie the amium dieooun2
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1RE
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![On January 1, 2021, STUDY HARDER Company purchased 9% bonds with face amount of P6,000,000.
The bonds mature on January 1, 2026 and were purchased for P5,550,000 to yield 11%. The entity
classified the bonds as held for trading and interest is payable annually every December 31. The entity
provided the following information about fair value of the bonds and effective rate:
Fair Value
Effective Rate
December 31, 2021
December 31, 2022
5,450,000
6,150,000
12%
8%
On December 31, 2022, the entity changed the business model for this investment to collect contractual
cash flows composed of principal and interest. On January 1, 2023, the fair value of the bonds did not
change. At the reclassification date, how much is the premium or discount?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F96085c08-9970-46f4-ac03-678391a58711%2F9c00a44a-9e1f-472b-b670-fd696d5824e7%2Fvepq72_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2021, STUDY HARDER Company purchased 9% bonds with face amount of P6,000,000.
The bonds mature on January 1, 2026 and were purchased for P5,550,000 to yield 11%. The entity
classified the bonds as held for trading and interest is payable annually every December 31. The entity
provided the following information about fair value of the bonds and effective rate:
Fair Value
Effective Rate
December 31, 2021
December 31, 2022
5,450,000
6,150,000
12%
8%
On December 31, 2022, the entity changed the business model for this investment to collect contractual
cash flows composed of principal and interest. On January 1, 2023, the fair value of the bonds did not
change. At the reclassification date, how much is the premium or discount?
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