Pedro Co purchased a bond investment in JuanCompany. The following are the data pertaining toPedro's Investments in Debt Security.Date of purchase:January 1, 2021Purchase price:P4,200,000Principal amount:P4,000,000Cash interest:5% per annum, payable on December 31Effective interest:3.8806% per annumMaturity date:December 31, 2025Fair value of the bond:December 31, 2021 at 3% rateP4,297,368December 31, 2022 at 3.5% rateP4,168,098December 31, 2023 at 4% rateP4,075,444December 31, 2024 at 4.5% rateP4,019,139If initially the investment is accounted for as AmortizedCost for two years and then shifted it to Trading Security,what is the adjustment to Income at reclassification date?

Financial assets are reported on a balance sheet at their amortized value, which is equal to their…

Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro's Investments in Debt Security. Date of purchase: Purchase price: Principal amount: Cash interest: Effective interest: Maturity date: Fair value of the bond: December 31, 2021 at 3% rate December 31, 2022 at 3.5% rate December 31, 2023 at 4% rate December 31, 2024 at 4.5% rate January 1, 2021 P4,200,000 P4,000,000 5% per annum, payable on December 31 3.8806% per annum December 31, 2025 P4,297,368 P4,168,098 P4,075,444 P4,019,139 If initially the investment is accounted for as Amortized Cost for two years and then shifted it to Trading Security, what is the adjustment to Income at reclassification date?

Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro's Investments in Debt Security. Date of purchase: Purchase price: Principal amount: Cash interest: Effective interest: Maturity date: Fair value of the bond: December 31, 2021 at 3% rate December 31, 2022 at 3.5% rate December 31, 2023 at 4% rate December 31, 2024 at 4.5% rate January 1, 2021 P4,200,000 P4,000,000 5% per annum, payable on December 31 3.8806% per annum December 31, 2025 P4,297,368 P4,168,098 P4,075,444 P4,019,139 If initially the investment is accounted for as Amortized Cost for two years and then shifted it to Trading Security, what is the adjustment to Income at reclassification date?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 99PSA

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Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro's Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 at 3% rate P4,297,368 December 31, 2022 at 3.5% rate P4,168,098 December 31, 2023 at 4% rate P4,075,444 December 31, 2024 at 4.5% rate P4,019,139 If initially the investment is accounted for as FVPL for two years and then shifted it to amortized method, what is the carrying value of the Investment at the end of 2023?
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are held for collection of contractual cash flow, what amount is the carrying value of investment in 2024? a. 4,000,000 b. 4,043,102 c. 4,084,594 d. 4,200,000
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are held for collection of contractual cash flow and for sale of financial asset, what amount is the carrying value of Investment in 2022? a. 4,200,000 b. 4,124,536 c. 3,800,000 d. 4,560,000
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are purchased on September 1, 2021 rather than January 2021 and the company still reports on a calendar basis, and the bonds are held for collection of contractual cash flow, what amount is the carrying value of investment in 2024? a. 4,098,425 b. 4,070,763 c. 4,084,594 d. 4,043,102
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are held for trading, the amount of long term investment be presented in the statement of financial position in 2022?
The following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1,2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securitiesthat is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be helduntil their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costingP29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, andtreasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bondretirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds payable…
The following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1,2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securitiesthat is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be helduntil their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costingP29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, andtreasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bondretirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds payable…
Requ a. Using the present value tables in Chapter 6, calculate the proceeds (issue price) of Learned, Inc.'s, bonds on January 1, 2013, assuming that the bonds were sold to provide a market rate of return to the investor. b. Assume instead that the proceeds were $93,000,000. Use the horizontal model (or write the journal entry) to record the payment of semiannual interest and the related premium amortization on June 30, 2013, assuming that the premium of $3,000,000 is amortized on a straight-line basis. o 0ompound interest method
The following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1, 2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securities that is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be held until their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costing P29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, and treasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bond retirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds…
On January 1, 2021, Panama Company purchased P3,000,000 face amount, 9% bonds. The bonds were purchased to yield 8% interest. The bonds mature on January 1, 2026, and pay interest annually on December 31. The entity used 2 decimal places for the PVF. If measured at amortized cost, how much is the carrying amount of investment in bonds on December 31, 2021?
. On December 31, 2019, Sinigang Company purchased debt investments at amortized cost, P3,000,000 serial bonds with a nominal rate of 10% and effective rate at that time is 13%. Bonds with a face value of P1,000,000 mature on December 31, 2020 and every December 31 thereafter. Use 3 decimal places for PV factors. What is the carrying amount of the debt investment on December 31, 2020?A. P1,923,212B. P2,852,400C. P2,923,212D. P3,000,000
On April 1, 2021 Jay Sy Co. purchased a P200,000 at face value bond investment that will mature on April 1, 2027. Interest on this bond is collectible every April 1 starting 2022, Jay Sy Co. account for this investment based on business model of collecting contractual cash flows and to sell when circumstances warrant. Jay Sy Co. paid other directly attributable cost of P10,160 to acquire the investment. The bond after transaction cost will yield 5% interest. Effective interest at the end of 2021, and 2023 were 3%, and 6%, respectively. While the investment is quoted at 105 on December 31, 2022. Jay Sy Co. reported interest income of P7,881 in 2021 related to this bond, amortization of P1,119 and cumulative balance in other comprehensive income of P19,707 at the end of 2021. How much is the correct interest income that Jay Sy should report in its Statement of Comprehensive income for the period ending December 31, 2022? How much is the amount of unrealized gain (loss) in its…