The Polythene Pam Company purchases P2,000,000 of bonds. The asset has been designated as one fair value through profit and One year later, 10% of the bonds are sold for P400,000. Total cumulative gains previously recognized in Polythene Pam's financial statements in respect of the asset are P100,000. What is the amount of the gain on disposal to be recognized in profit or loss? O P200,000 O P190,00O
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A: Solution: Cost of 10% bonds sold = Total cost *10% = 2000000 * 10% = P200,000
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- Mills Corporation acquired as a long-term investment $235 million of 8% bonds, dated July 1, on July 1, 2024. Company management has classified the bonds as an available-for-sale investment. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $270 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $260 million. Required: 1. & 2. Prepare the journal entry to record Mills’ investment in the bonds on July 1, 2024 and interest on December 31, 2024, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2024, balance sheet? 4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2025, for $280 million. Prepare the journal entries required on the date of sale.Brooks Company purchases debt investments as trading securities at a cost of $71,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $90,000. Brooks sells a portion of its trading securities (costing $35,500) for $40,250 cash. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each transaction.On its December 31, 2024, balance sheet, Sandhill Company reported its investment in equity securities, which cost $690000, at fair value of $618000. At December 31, 2025, the fair value of the securities was $649000. What should Sandhill report on its 2025 income statement as a result of the increase in fair value of the investments in 2025? O Realized gain of $31000 O Unrealized gain of $31000 O Unrealized loss of $41000 O $0
- 14. A company has the following information during the year? Total consideration from share issuances amounted to P3,000,000. A land and building were acquired through a lump sum payment of P450,000. A mortgage amounting to P150,000 was assumed on the land and building. Total payments of P70,000 were made during the year on the mortgage assumed on the land and building, The payments are inclusive of interest amounting to P20,000. Additional capital of P220,000 was obtained through bank loans. None of the bank loans were paid during the year. Half of the bank loans required a secondary mortgage on the land and building. There is no accrued interest as of year-end. Dividends declared during the year but remained unpaid amounted to P63,000. No other transactions during the year affected liabilities. Retained earnings as of December 31, 20x1 is P130,000 How much is the profit for the year? 15. Using the information on the preceding number, how much is the total assets as of the end of the…Katipunan Company has financial liability (accounted under amortized cost) with face amount of P5,000,000 and a carrying amount of P4,800,000. In addition, there is an unpaid interest of P250,000, accrued. The creditor agreed to the settlement of the bonds payable in exchange for 50,000 shares of P50 par value. The shares have current market value of P4,500,000. How much should be recorded as additional share premium as a result of the extinguishment of the liability?The Q3 Company purchases P2,000,000 of bonds. The asset has been designated as one at fair value through profit and loss. One year later, 10% of the bonds are sold for P400,000. Total cumulative gains previously recognized in Q3's financial statements in respect of the asset are P100,000. What is the amount of the gain on disposal to be recognized in profit or loss?
- 28. On January 1, 2020, Walang Kayo Co. purchased investment securities for P1,500,000. The securities are classified as investment in equity securities at fair value through profit or loss. At December 31, 2016, the securities had a fair value of P2,100,000 but not yet been sold. The company also recognized a P400,000 restructuring charge during the year. The restructuring charge is composed of an impairment write down of manufacturing facility. Tax rules do not allow a deduction for the write down unless the facility is sold. The facility was not sold by the end of the year. After including the unrealized gain on the equity investment @FVPL and the restructuring charge, the accounting income before tax for the year was P5,000,000. The income tax rate for the current and future years is 30%. What is Walang Kayo’s current tax expense? A. P1,440,000 B. P1,500,000 C. P1,560,000 D. P1,920,000ABC Company , a holder of P1,000,000 XYZ Company bonds, collected the interest due on March 31, year 1, and then sold the bonds to W, Inc. for P975,000. On that date, XYZ, a 75% owner of W had P1,075,000 carrying amount for the bonds. What was the effect of W's purchase of XYZ's bond on the retained earnings amount reported in XYZ's March 31, year 1 consolidated balance sheet? (Answer format: amount increase/decrease e.g. 10000 decrease, if no effect, just type 0)Tanner-UNF Corporation acquired as a long-term investment $180 million of 7.0% bonds, dated July 1, on July 1, 2024. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Tanner-UNF paid $160.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $160.0 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2024 and interest on December 31, 2024, a the effective (market) rate. 3. At what amount will Tanner-UNF report its investment in the December 31, 2024, balance sheet? 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2025, for $130.0 million. Prepare the journal entry to record the sale.…
- Tanner-UNF Corporation acquired as a long-term investment $200 million of 6% bonds, dated July 1, 2024. Assume Tanner-UNF management is holding the bonds in a trading portfolio. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $210 million. Required: 1. to 3. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2024, interest on December 31, 2024, at the effective (market) rate and the fair value adjustment at December 31. 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motiving Tanner-UNF to sell the investment on January 2, 2025, for $190 million. Prepare the journal entry to record the sale. Comple this question by entering your wers in the tabs below. Req 1 to 3 Suppose Moody's bond rating agency downgraded the risk rating of the bonds motiving Tanner-UNF to…Mills Corporation acquired as a long-term investment $250 million of 8% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $290.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $270.0 million. Required: 1. & 2. Prepare the journal entry to record Mills' investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2021, balance sheet? 4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $300 million. Prepare the journal entry to record the sale.MEME Corporation’s Retained Earnings at December 31, 2021 amounted to P2,000,000. On that date, the corporation declared and distributed its investment property which was acquired at a historical cost P300,000 and has a fair market value of P450,000 on December 31, 2021. On the date of declaration and distribution, by what amount should Retained Earnings be charged? A. P300,000 B. P150,000 C. None D. P450,000