On June 1, 2019, YODA CORP. acquired a 5-year, 10%, P1,000,000 face value bonds at 92. The company paid broker's fees and non-refundable taxes amounting to P118,896. As a result, yield rate on the bond was 9%. Interests are collectible annually every May 31. The bonds were selling at 120, 105, 98 as of December 31, 2019, December 31, 2020 and December 31, 2021; respectively. On September 30, 2021, YODA sold P250,000 face value bonds for a total cost of P280,000. Case 1: Answer the following questions assuming the company classifies the investment as financial assets at amortized cost:

On June 1, 2019, YODA CORP. acquired a 5-year, 10%, P1,000,000 face value bonds at 92. The company paid broker's fees and non-refundable taxes amounting to P118,896. As a result, yield rate on the bond was 9%. Interests are collectible annually every May 31. The bonds were selling at 120, 105, 98 as of December 31, 2019, December 31, 2020 and December 31, 2021; respectively. On September 30, 2021, YODA sold P250,000 face value bonds for a total cost of P280,000. Case 1: Answer the following questions assuming the company classifies the investment as financial assets at amortized cost:

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

On June 1, 2019, YODA CORP. acquired a 5-year, 10%, P1,000,000 face
value bonds at 92. The company paid broker's fees and non-refundable
taxes amounting to P118,896. As a result, yield rate on the bond was 9%.
Interests are collectible annually every May 31. The bonds were selling at
120, 105, 98 as of December 31, 2019, December 31, 2020 and
December 31, 2021; respectively. On September 30, 2021, YODA sold
P250,000 face value bonds for a total cost of P280,000.
Case 1: Answer the following questions assuming the company classifies
the investment as financial assets at amortized cost:
How much is the December 31, 2021 interest receivable?
43,750
17,259
18,750

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