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 entityclassified the bonds as held for trading and interest is payable annually every December 31. The entityprovided the following information about fair value of the bonds and effective rate:Fair ValueEffective RateDecember 31, 2021December 31, 202212%5,450,0006.150,0008%On December 31, 2022, the entity changed the business model for this investment to collect contractualcash flows composed of principal and interest. On January 1, 2023, the fair value of the bonds did notchange. At the reclassification date, how much is the premium or discount?

A premium bond has a coupon rate higher than the prevailing interest rate for that bond maturity and…

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 December 31, 2021 December 31, 2022 5,450,000 6.150,000 Effective Rate 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?

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 December 31, 2021 December 31, 2022 5,450,000 6.150,000 Effective Rate 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?

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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