Solution-At what amount should the bond investments be shown

At what amount should the bond investments be shown

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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

Requirement - Assume that the company intended to collect the principal and interest over the term of the bonds and did not choose the fair value option.

-At what amount should the bond investments be shown on December 31, Year 2 statement of financial position?

-What amount of gain or loss should Grow recognize on the sale of investments on April 1, Year 3?

-What amount of interest income will be taken to profit or loss for the year ended December 31, Year 3?

-At what amount should the bond investments be shown on December 31, Year 3 statement of financial position?

Reference no: EM132947783

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At what amount should the bond investments be shown

Reference no: EM132947783

Reference no: EM132947783

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