Pedro Co purchased a bond investment in JuanCompany. The following are the data pertaining toPedro's Investments in Debt Security.Date of purchase:January 1, 2021Purchase price:P4,200,000Principal amount:P4,000,000Cash interest:5% per annum, payable on December 31Effective interest:3.8806% per annumMaturity date:December 31, 2025Fair value of the bond:December 31, 2021 at 3% rateP4,297,368December 31, 2022 at 3.5% rateP4,168,098December 31, 2023 at 4% rateP4,075,444December 31, 2024 at 4.5% rateP4,019,139If initially the investment is accounted for as AmortizedCost for two years and then shifted it to Trading Security,what is the adjustment to Income at reclassification date?

Financial assets are reported on a balance sheet at their amortized value, which is equal to their…

Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro's Investments in Debt Security. Date of purchase: Purchase price: Principal amount: Cash interest: Effective interest: Maturity date: Fair value of the bond: December 31, 2021 at 3% rate December 31, 2022 at 3.5% rate December 31, 2023 at 4% rate December 31, 2024 at 4.5% rate January 1, 2021 P4,200,000 P4,000,000 5% per annum, payable on December 31 3.8806% per annum December 31, 2025 P4,297,368 P4,168,098 P4,075,444 P4,019,139 If initially the investment is accounted for as Amortized Cost for two years and then shifted it to Trading Security, what is the adjustment to Income at reclassification date?

Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro's Investments in Debt Security. Date of purchase: Purchase price: Principal amount: Cash interest: Effective interest: Maturity date: Fair value of the bond: December 31, 2021 at 3% rate December 31, 2022 at 3.5% rate December 31, 2023 at 4% rate December 31, 2024 at 4.5% rate January 1, 2021 P4,200,000 P4,000,000 5% per annum, payable on December 31 3.8806% per annum December 31, 2025 P4,297,368 P4,168,098 P4,075,444 P4,019,139 If initially the investment is accounted for as Amortized Cost for two years and then shifted it to Trading Security, what is the adjustment to Income at reclassification date?

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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