On January 1, 2021, ABC acquired a 10%, 5 year, 2,000,000 face value bonds for trading purposes. The transaction price was 2,020,000 while transaction cost incurred totalled 57,793. This resulted to an effective interest rate of 9%. The value of the bonds was 2,010,000 and 1,970,000 as of December 31, 2021 and 2022 respectively which resulted to ABC being unable to dispose the investment. In the year 2023, the management decided to hold the investment until its maturity. As of the end of 2023, the bonds are valued at 1,965,750. The effective interest rate as of this date is 11%. Assuming the investment qualifies for reclassification, what is the interest income for the year 2024? Provide solution and journal entry.
On January 1, 2021, ABC acquired a 10%, 5 year, 2,000,000 face
Assuming the investment qualifies for reclassification, what is the interest income for the year 2024?
Provide solution and
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