9. On January 1, 2020, HIBISCUS Company purchased 4,000 of P1,000 face value, 10% bonds of IXORA Company for P4,270,600. The bonds will mature on January 1, 2025 and pay interest semi-annually on January 1 and July 1. Bonds effective interest rate is 8%. HIBISCUS has a business model of collecting all the contractural cash flows related to the instrument. How much should HIBISCUS report as interest income on the bonds? *

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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9. On January 1, 2020, HIBISCUS Company purchased 4,000 of P1,000
face value, 10% bonds of IXORA Company for P4,270,600. The bonds
will mature on January 1, 2025 and pay interest semi-annually on January
1 and July 1. Bonds effective interest rate is 8%. HIBISCUS has a business
model of collecting all the contractural cash flows related to the
instrument. How much should HIBISCUS report as interest income on the
bonds?
Transcribed Image Text:9. On January 1, 2020, HIBISCUS Company purchased 4,000 of P1,000 face value, 10% bonds of IXORA Company for P4,270,600. The bonds will mature on January 1, 2025 and pay interest semi-annually on January 1 and July 1. Bonds effective interest rate is 8%. HIBISCUS has a business model of collecting all the contractural cash flows related to the instrument. How much should HIBISCUS report as interest income on the bonds?
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