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%.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
100%
PROBLEM 8
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 FVTOCI but reclassified on January 1, 2022 due to changes in
business model as investment at amortized cost, at what amount should the
investment account be reported in December 31, 2022 financial statement?
Transcribed Image Text:PROBLEM 8 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 FVTOCI but reclassified on January 1, 2022 due to changes in business model as investment at amortized cost, at what amount should the investment account be reported in December 31, 2022 financial statement?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Capital Gains and Losses
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education