Unrealized holding gain/(loss) in OCI for year 2014 2. Interest expense for the year ended December 31, 2014
On January 1, 2014, SM Inc. issued 5-year bonds with face value of P10,000,000 at 105. The nominal rate is 10% and the interest is payable annually on December 31. The bonds mature on January 1, 2019. The entity paid bond issue cost of P200,000. After affecting the bond issue cost, the interpolated effective interest rate of the bonds payable is 9.23%. SM Inc. irrevocably designated the bonds payable at fair value through profit or loss. The bonds are quoted on December 31, 2014 at 110. It is reliably determined that P100,000 of the fair value increase is attributable to credit risk and the balance is attributable to change in market interest rate.
Required:
1. Unrealized holding gain/(loss) in OCI for year 2014
2. Interest expense for the year ended December 31, 2014
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