On January 1, 2022, Kristine Company purchased 12% bonds with face amount of P5,000,000 for P5,500,000 includingtransaction cost of P100,000. The bonds provide an effective yield of 10%. The bonds are dated January 1, 2022,mature on January 1, 2027 and pay interest annually on December 31 of each year. The bonds are quoted at 115 onDecember 31, 2022. The entity has irrevocably elected to use the fair value option.What amount of interest income should be reported in 2022?A. 600,000В. 550,000C. 660,000D. 540,000

Bonds are priced by discounting future cash flows. Future cash flows include coupons and par value…

Answered: On January 1, 2022, Kristine Compar…

Business

Accounting

On January 1, 2022, Kristine Compar transaction cost of P100,000. The mature on January 1, 2027 and pay

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, 2022, Kristine Company purchased 12% bonds with face amount of P5,000,000 for P5,500,000 including
transaction cost of P100,000. The bonds provide an effective yield of 10%. The bonds are dated January 1, 2022,
mature on January 1, 2027 and pay interest annually on December 31 of each year. The bonds are quoted at 115 on
December 31, 2022. The entity has irrevocably elected to use the fair value option.
What amount of interest income should be reported in 2022?
A. 600,000
В. 550,000
C. 660,000
D. 540,000

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