Problem 21-6 (IFRS- From FVPL to FVOCI) On January 1, 2021, Gerry Company purchased 6% bos with face amount of P4,000,000. The bonds mature on January 1, 2026 and were purchase for P3,530,000 to yield 9%. The entity classified the bonds as held for trading and inters is payable annually every December 31. Fair value Effective rate December 31, 2021 December 31, 2022 3,490,000 3,425,000 10% 12% On December 31, 2021, the entity changed the business model to collect contractual cash flows and also to sell the bonds in the open market. On January 1, 2022, the fair value of the bonds did not chang Required: 1. What amount should be reported as interest income for 2021? 2. What amount of unrealized loss should be reported in the income statement for 2021? 3. What amount should be reported as interest income for 2022? 4. What amount of unrealized loss should be recognized in OCI for 2022? 5. Prepare journal entries for 2021 and 2022. IN Ca T T 624
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Problem 21-6 (IFRS- From FVPL to FVOCI) On January 1, 2021, Gerry Company purchased 6% bos with face amount of P4,000,000. The bonds mature on January 1, 2026 and were purchase for P3,530,000 to yield 9%. The entity classified the bonds as held for trading and inters is payable annually every December 31.
Fair value
Effective rate
December 31, 2021 December 31, 2022
3,490,000 3,425,000
10%
12%
On December 31, 2021, the entity changed the business model to collect contractual
Required:
1. What amount should be reported as interest income for 2021?
2. What amount of unrealized loss should be reported in
the income statement for 2021?
3. What amount should be reported as interest income for 2022?
4. What amount of unrealized loss should be recognized in OCI for 2022?
5. Prepare
IN
Ca
T
T
624
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