On January 1, 20x1, ABC Co. acquired 10%, P1,000,000 bonds for P827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs P80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%. The bonds are to be held under a "hold to collect and sell" business model. Information on fair values is as follows: December 31, 20x1...............98 December 31, 20x2..............102 December 31, 20x3..............100 9.How much is the carrying amount of the investment on December 31, 20x1? a. 935,134 b. 1,002,000 c. 980,000 d. 965,443 10. How much is the unrealized gain (loss) recognized in other comprehensive income on December 31, 20x1? a. 45,866 b. (45,866) c. (37,899) d. 0 11. How much is the interest income recognized in 20x2? a. 126,999 c. 135,088 b. 130,779 d. 144,388
On January 1, 20x1, ABC Co. acquired 10%, P1,000,000 bonds for P827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs P80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%. The bonds are to be held under a "hold to collect and sell" business model. Information on fair values is as follows: December 31, 20x1...............98 December 31, 20x2..............102 December 31, 20x3..............100 9.How much is the carrying amount of the investment on December 31, 20x1? a. 935,134 b. 1,002,000 c. 980,000 d. 965,443 10. How much is the unrealized gain (loss) recognized in other comprehensive income on December 31, 20x1? a. 45,866 b. (45,866) c. (37,899) d. 0 11. How much is the interest income recognized in 20x2? a. 126,999 c. 135,088 b. 130,779 d. 144,388
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 20x1, ABC Co. acquired 10%, P1,000,000 bonds for P827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs P80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%.
The bonds are to be held under a "hold to collect and sell" business model. Information on fair values is as follows:
December 31, 20x1...............98
December 31, 20x2..............102
December 31, 20x3..............100
9.How much is the carrying amount of the investment on December 31, 20x1?
a. 935,134
b. 1,002,000
c. 980,000
d. 965,443
10. How much is the unrealized gain (loss) recognized in other comprehensive income on December 31, 20x1?
a. 45,866
b. (45,866)
c. (37,899)
d. 0
11. How much is the interest income recognized in 20x2?
a. 126,999
c. 135,088
b. 130,779
d. 144,388
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