On July 1, 2021 MIA Company purchased P500,000 face value AIM Company 8% bonds for P455,000 plus accrued interest to yield 10%. The bonds were designated as at fair value through profit or loss. The bonds mature on January 1, 2025 and pay interest annually on January 1. On December 31, 2021, the bonds had a fair value of P472,500. On February 14, 2022, MIA sold the bonds for P460,000 plus accrued interest.
On July 1, 2021 MIA Company purchased P500,000 face value AIM Company 8% bonds for P455,000 plus accrued interest to yield 10%. The bonds were designated as at fair value through profit or loss. The bonds mature on January 1, 2025 and pay interest annually on January 1. On December 31, 2021, the bonds had a fair value of P472,500. On February 14, 2022, MIA sold the bonds for P460,000 plus accrued interest.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2021 MIA Company purchased P500,000 face value AIM Company 8% bonds for P455,000 plus accrued interest to yield 10%. The bonds were designated as at fair value through profit or loss. The bonds mature on January 1, 2025 and pay interest annually on January 1. On December 31, 2021, the bonds had a fair value of P472,500. On February 14, 2022, MIA sold the bonds for P460,000 plus accrued interest.
What is the interest income reported by MIA Company for the year 2021?
a. P20,000
b. P18,200
c. P25,000
d. P22,750
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