On May 1, 2020, Girl Co. purchased a short-term P2,000,000 face value, 9% debt instruments for P1,860,000 including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2023, and pay interest semi-annually on January 1 and July 1. On December 31, 2020, the fair market value of the instruments is 98%. On March 2, 2021, Girl Co. sold the trading security for P1,980,000. How much will be recognized as income on the 2020 income statement? P100,000 P120,000 P160,000 P280,000 answer not given

On May 1, 2020, Girl Co. purchased a short-term P2,000,000 face value, 9% debt instruments for P1,860,000 including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2023, and pay interest semi-annually on January 1 and July 1. On December 31, 2020, the fair market value of the instruments is 98%. On March 2, 2021, Girl Co. sold the trading security for P1,980,000. How much will be recognized as income on the 2020 income statement? P100,000 P120,000 P160,000 P280,000 answer not given

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Metlock Incorporated issued $0.81 million of 7.5%, 10-year bonds on July 1, 2019, at face value. Interest is payable each December 31. The company has chosen to apply the fair value option in accounting for the bonds. A risk assessment at December 31, 2020, shows that Metlock’s credit risk has increased, and as a result of the increased credit risk, the fair value of the bonds is $729,000 on that date. a. Prepare the company’s journal entries on December 31, 2020, if Metlock follows ASPE. b. Prepare the company’s journal entries on December 31, 2020, if Metlock follows IFRS 9