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: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 at 3% rate P4,297,368 December 31, 2022 at 3.5% rate P4,168,098 December 31, 2023 at 4% rate P4,075,444 December 31, 2024 at 4.5% rate P4,019,139 If initially the investment is accounted for as Amortized Cost for two years and then shifted it to FVOCI method, what amount of income recognized in Profit or loss in 2023?
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: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 at 3% rate P4,297,368 December 31, 2022 at 3.5% rate P4,168,098 December 31, 2023 at 4% rate P4,075,444 December 31, 2024 at 4.5% rate P4,019,139 If initially the investment is accounted for as Amortized Cost for two years and then shifted it to FVOCI method, what amount of income recognized in Profit or loss in 2023?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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:
January 1, 2021
Purchase price:
P4,200,000
Principal amount:
P4,000,000
Cash interest:
5% per annum, payable on December 31
Effective interest:
3.8806% per annum
Maturity date:
December 31, 2025
Fair value of the bond:
December 31, 2021 at 3% rate
P4,297,368
December 31, 2022 at 3.5% rate
P4,168,098
December 31, 2023 at 4% rate
P4,075,444
December 31, 2024 at 4.5% rate
P4,019,139
If initially the investment is accounted for as Amortized Cost for two years and
then shifted it to FVOCI
method, what amount of income recognized in
Profit or loss in 2023?
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