On January 1, 2019, Lasagna Company purchased 3,000, P1,000 face value term bonds with a stated rate of 10% as at amortized cost. The bonds pay interest annually on December 31 and will be redeemed entirely by the issuer on December 31, 2022. The bond investment was purchased for P2,819,100 at an effective rate of 12%. On January 1, 2020, the entity changed business model for managing its financial assets and this investment was reclassified as debt investments at fair value through profit or loss. On this date, the bonds are quoted at 101. What is the amount taken to profit or loss as a result of the reclassification?
On January 1, 2019, Lasagna Company purchased 3,000, P1,000 face value term bonds with a stated rate of 10% as at amortized cost. The bonds pay interest annually on December 31 and will be redeemed entirely by the issuer on December 31, 2022. The bond investment was purchased for P2,819,100 at an effective rate of 12%. On January 1, 2020, the entity changed business model for managing its financial assets and this investment was reclassified as debt investments at fair value through profit or loss. On this date, the bonds are quoted at 101. What is the amount taken to profit or loss as a result of the reclassification?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1MC
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On January 1, 2019, Lasagna Company purchased 3,000, P1,000 face
On January 1, 2020, the entity changed business model for managing its financial assets and this investment was
reclassified as debt investments at fair value through profit or loss. On this date, the bonds are quoted at 101.
What is the amount taken to profit or loss as a result of the reclassification?
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