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Determine the amount to be recognized as fair value

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Reference no: EM132935389

Question - Paombong corporation purchased P200,000 8% bonds for P184,557 on January 1, 2019. Paombong classified the bonds as FA at FVTOCI. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2024. On January 2, 2021, the fair value of the bonds mature on January 1, 2024. On January 2, 2021, the fair value of the bonds did not change from the previous reporting period end. On this date, Paombong sold the bonds for its fair value after receiving interest to meet its liquidity needs.

The fair value of the bonds are as follows:

December 31, 2019 190,449

December 31, 2020 186,363

Required - Based on the above and the result of your audit, determine the following:

1. Interest income for the year 2019.

2. The amount to be recognized as fair value adjustment gain the entity's 2019 other comprehensive income.

3. The gain or loss on sale of investment on January 2, 2021.

Reference no: EM132935389

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