On January 2, 2021, Santos Company invested in a 4 -year, 10% bond with face value of P6,000,000 in which interest is to be paid every December 31. The bond has an effective interest rate of 9% and was acquired at prevailing rate of interest. On December 31, 2021, the bond has fair value of P6,229,862, which is based on prevailing rate of interest of 8.5%. Assume that on the date of acquisition the debt investment was designated as investment at amortized cost but reclassified on January 1, 2022 due to changes in business model as investment at FVTPL, what amount of gain (loss) should the company recognized on the date of reclassification?
On January 2, 2021, Santos Company invested in a 4 -year, 10% bond with face value of P6,000,000 in which interest is to be paid every December 31. The bond has an effective interest rate of 9% and was acquired at prevailing rate of interest. On December 31, 2021, the bond has fair value of P6,229,862, which is based on prevailing rate of interest of 8.5%. Assume that on the date of acquisition the debt investment was designated as investment at amortized cost but reclassified on January 1, 2022 due to changes in business model as investment at FVTPL, what amount of gain (loss) should the company recognized on the date of reclassification?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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