On January 1, 2021, Illuminati Company purchased 10% bonds with a face amount of P3,000,000. Th bonds mature on January 1, 2031, and were purchased for P3,405,000 to yield 8%. The entity used th effective interest method of amortization and interest is payable annually every December 31. Th business model for this investment is to collect contractual cash flows composed of interest and principa On December 31, 2022, the entity changed the business model for this investment to realize fair valu changes. On January 1, 2023, the fair value of the bonds was P2,845,000 at an effective rate of 119
On January 1, 2021, Illuminati Company purchased 10% bonds with a face amount of P3,000,000. Th bonds mature on January 1, 2031, and were purchased for P3,405,000 to yield 8%. The entity used th effective interest method of amortization and interest is payable annually every December 31. Th business model for this investment is to collect contractual cash flows composed of interest and principa On December 31, 2022, the entity changed the business model for this investment to realize fair valu changes. On January 1, 2023, the fair value of the bonds was P2,845,000 at an effective rate of 119
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
a.502,592 gain
b.502,592 loss
c.532,400 gain
d.532,400 loss
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