Reference no: EM132946071
Question - On January 1, Year 1, Grow Company purchased P1,000,000 12% bonds of Glow Company for P1,063,394, a price that yields 10%. Interest on these bonds is payable every December 31. The bonds mature on December 31, Year 4. On April 1, Year 3, to pay a maturing obligation, Grow sold P600,000 face value bonds at 101 plus accrued interest. Market value of the bonds on different dates is as follows:
December 31, Year 1 - 108
December 31, Year 2 - 106
December 31, Year 3 - 104
Requirements - Assume that the bonds were classified as debt investments at fair value through profit or loss.
-How much is interest income for the year ended December 31, Year 1?
-What amount of gain or loss should Grow report on the sale of the bond investments on April 1, Year 3?
-At what amount should the bond investments be shown on December 31, Year 2 and December 31, Year 3 statement of financial position?
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