What is the compound journal entry to record the reclassification and update the related accounts? Include the date and explanation.
On June 30, 2021, ABC Corp. purchased a P3,000,000 face value
bonds with P2,925,067.05 cash. The interest rate is 10%, payable
semiannually every June 30 and Dec. 31. The remaining term as of
acquisition date is three years. ABC purchased it for both
contractual cashflows and trading purpose, and hence initially
designated it as FA‐FV‐OCI. The effective interest rate is 11%. Within
the year 2022, there was a change in the purpose of holding the
investment to maturity. As of the end of the years 2022 and 2023,
the bonds were valued at P2,950,000 and P2,975,000 respectively.
1. What is the compound
reclassification and update the related accounts? Include
the date and explanation.
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