On January 1, 2018, CEBU Company purchased 12% bonds, having a maturity value of P800,000, for P860,652 including transaction cost of P110,000. The bonds provide the bondholders with a 10% yield, are dated January 1, 2018, and mature Janauary 1, 2023, with interest receivable December 31 of each year. CEBU’s business model requires the accounting of the debt investment at Fair Value Through Other Comprehensive Income (FVOCI). The bonds are quoted at 108 and 109 at the end of 2018 and 2019 respectively. How much is the amount of interest related to bonds was collected in 2019?
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On January 1, 2018, CEBU Company purchased 12% bonds, having a maturity value of P800,000, for P860,652 including transaction cost of P110,000. The bonds provide the bondholders with a 10% yield, are dated January 1, 2018, and mature Janauary 1, 2023, with interest receivable December 31 of each year.
CEBU’s business model requires the accounting of the debt investment at Fair Value Through Other Comprehensive Income (FVOCI). The bonds are quoted at 108 and 109 at the end of 2018 and 2019 respectively.
How much is the amount of interest related to bonds was collected in 2019?
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- On January 1, 2019, Davao de Oro Company purchased bonds with a face amount of P5,000,000. The entity paid P4,600,000 plus a transaction cost of P142,000 for the bond investment. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and also to sell the bonds in the open market. The bonds mature on December 31, 2021 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2019 and 110 on December 31, 2020. The bonds are redeemed at face amount on December 31, 2021. Required: 1. Assuming that half of the bonds were sold on July 1, 2020 with accrued interest, provide the following: A. Journal entries for the year 2020. B. Compute the gain or loss on sale from selling the bonds. C. Continue the amortization from selling date until maturity date.On January 1, 2019, Davao de Oro Company purchased bonds with a face amount of P5,000,000. The entity paid P4,600,000 plus a transaction cost of P142,000 for the bond investment. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and also to sell the bonds in the open market. The bonds mature on December 31, 2021 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2019 and 110 on December 31, 2020. The bonds are redeemed at face amount on December 31, 2021. Required: 1. Prepare an amortization table for the discount. 2. Assuming that half of the bonds were sold on July 1, 2020 with accrued interest, provide the following: A. Journal entries for the year 2020. B. Compute the gain or loss on sale from selling the bonds. C. Continue the amortization from selling date until maturity date.On January 1, 2018, CEBU Company purchased 12% bonds, having a maturity value of P800,000, for P860,652 including transaction cost of P110,000. The bonds provide the bondholders with a 10% yield, are dated January 1, 2018, and mature January 1, 2023, with interest receivable December 31 of each year. CEBU’s business model requires the accounting of the debt investment at Fair Value Through Other Comprehensive Income (FVOCI). The bonds are quoted at 108 and 109 at the end of 2018 and 2019 respectively. At what amount should the debt investment be initially recognized at the time of acquisition?
- On January 1, 2019, LEMON Company purchased bonds with face amount of ₱6,000,000 for ₱6,309,000. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and also to sell the bonds in the open market. The bonds mature on December 31, 2021 and pay 10% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 95 and 90 on December 31, 2019 and December 31, 2020, respectively. What amount of cumulative unrealized gain or loss should be reported in the statement of financial position on December 31, 2020? (If loss, put a negative sign before the numerical answer)On January 1, 2018, OCEANIC Company purchased 12% bonds, having a maturity value of P800,000, for P860,652 including transaction cost of P110,000. The bonds provide the bondholders with a 10% yield, are dated January 1, 2018, and mature January 1, 2023, with interest receivable December 31 of each year. OCEANIC’s business model requires the accounting of the debt investment at Fair Value Through Profit or Loss (FVPL). The bonds are quoted at 108 and 109 at the end of 2018 and 2019 respectively. On April 1, 2020, the bonds were sold at 112 plus accrued interest. At what amount should the debt investment be initially recognized at the time of acquisition?On January 1, 2018, an entity purchased bonds with face amount of P5,000,000. The entity paid P4,500,000 plus transaction cost of P168,600. The bonds mature on December 31, 2020 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds were quoted at 105 on December 31, 2018 and 110 on December 31, 2019.The business model in managing the financial asset is to collect contractual cash flows that are solely payments of principal and interest and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2019, the entity changed its business model to collect only contractual cash flows. On December 31, 2020, the bonds are quoted at 115 and the market interest rate is 10%. find the following: 1. What amount of unrealized gain should be reported as component of OCI in the statement of comprehensive income for 2018? 2. What amount of unrealized gain should be reported as component of OCI in the statement of…
- On January 1, 2018, CHE Co. purchased 12% bonds, having a maturity value of P800,000, for P860,652 including transaction cost of P110,000. The bonds provide the bondholders with a 10% yield, are dated January 1, 2018, and mature January 1, 2023, with interest receivable December 31 of each year. CHE’s business model is to hold these bonds to collect contractual cash flows solely for payment of principal and interest and therefore designate such debt investment at amortized cost. On December 31, 2020 after paying the accrued interest, the issuer of bonds completed a negotiation with its creditors to reduce the interest from 12% to 8% for the remaining term of the bond due to continuous decline in the market rate of interest. The present value of 1 at 10% for 2 periods is 0.8264 while the present value of annuity of 1 at 10% for 2 periods is 1.7355. How much is the carrying value/amortized cost of the debt investment at December 31, 2018?Presented below are three independent situations:a. IKJUN Co. purchased 12% bonds having a maturity value of $100,000 for $107,581 on 1 January 2019. The bonds provide the bondholders with a 10% yield. They are dated January 2019, and mature January 1, 2024, with the interest received December 31 of each year. IKJUN’s business model is to hold these bonds to collect contractual cash flows.b. SONGHWA Co. acquired 10% of 100,000 ordinary shares of JEONGWON Co. at a total cost of $7 per share on March 16, 2019. On June 15, JEONGWON Co. declared and paid a $37,500 cash dividend. On December 31, JEONGWON Co. reported net income of $120,000 for the year. At December 31, the market price of JEONGWON Co. was $13 per share. The investment is classified as trading.c. JUNWAN Co. obtained significant influence over SEOKHYEONG Co. by buying 25% of SEOKHYEONG Co.’s 60,000 outstanding ordinary shares at a total cost of $10 per share on January 1, 2019. On July 20, SEOKHYEONG Co. declared and paid a…On January 1, 2019, ZZZ Company purchased bonds with face amount of P5,000000. The entity paid P4,500,000 plus transaction costs of P168,600. The bonds mature on December 31, 2022 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2019 and 110 on December 31, 2020. The business model in managing the financial asset is to collect contractual cash flows and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2020, the entity changed the business model to collect only contractual cash flows. On December 31, 2021, the bonds are quoted at 115 and the market rate of interest is 10%. What mount of cumulative unrealized gain should be reported as component of OCI in the statement of changes in equity for 2020?
- On January 1, 2017, KLM Company purchased bonds with faceamount of 5,000,000. The entity paid 4,600,000 plus transaction cost of 142,290. The bonds mature on December 31, 2019 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds were quoted at 106.5 on December 31, 2017 and 108 on December 31, 2018. Assume that the business model in managing financial asset is to collect contractual cash flows that are solely for payment of principal and interest and also to sell the bonds in an open market. What is the balance of unrealized gain-OCI on December 31, 2017?On January 1, 2019, ZZZ Company purchased bonds with face amount of P5,000000. The entity paid P4,500,000 plus transaction costs of P168,600. The bonds mature on December 31, 2022 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2019 and 110 on December 31, 2020. The business model in managing the financial asset is to collect contractual cash flows and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2020, the entity changed the business model to collect only contractual cash flows. On December 31, 2021, the bonds are quoted at 115 and the market rate of interest is 10%.what amount should be reported as interest income for 2021?On January 1, 2019, ZZZ Company purchased bonds with face amount of P5,000000. The entity paid P4,500,000 plus transaction costs of P168,600. The bonds mature on December 31, 2022 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2019 and 110 on December 31, 2020. The business model in managing the financial asset is to collect contractual cash flows and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2020, the entity changed the business model to collect only contractual cash flows. On December 31, 2021, the bonds are quoted at 115 and the market rate of interest is 10%. What is the carrying amount of the investment on December 31, 2021?