PROBLEM 4: On January 1, 2022, Queen Company purchased bonds with face amount of P5,000,000 for P4,760,000 including transaction cost of P160,000. The business model is to collect contractual cash flows and to sell the financial asset. The bonds mature on December 31, 2024 and pay 10% interest annually on December 31 with a 12% effective yield. The bonds are quoted at 105 on December 31, 2022. What amount should Queen Company report as interest income for 2022? What is the carrying amount of the investment as of December 31, 20222? What amount of unrealized gain should Queen Company report as component of other comprehensive income for 2022?

PROBLEM 4: On January 1, 2022, Queen Company purchased bonds with face amount of P5,000,000 for P4,760,000 including transaction cost of P160,000. The business model is to collect contractual cash flows and to sell the financial asset. The bonds mature on December 31, 2024 and pay 10% interest annually on December 31 with a 12% effective yield. The bonds are quoted at 105 on December 31, 2022. What amount should Queen Company report as interest income for 2022? What is the carrying amount of the investment as of December 31, 20222? What amount of unrealized gain should Queen Company report as component of other comprehensive income for 2022?

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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