Find the gain recognized and reported in the profit

Reference no: EM132669989

On January 1, 2019, Zamboanga Company purchased 9% bonds with face amount of P6,000,000. The bonds mature in January 1, 2024 and were purchased for P5,500,000 to yield 115.

Zamboanga Company classified the bonds as held for trading and interest is payable annually every December 31.

The fair value of the bonds on December 31, 2019 and December 31, 2020 were P5,450,000 (12% yield) and P6,150,000 (8% yield)

Problem 1: Assuming that Zamboanga Company reclassified the investment to financial asset measured at amortized cost:

a. The gain (loss) recognized and reported in the Profit and Loss section for 2019 is:

b. The carrying value of the bonds reported in the December 31, 2020 balance sheet is:

c. The gain (loss) recognized and reported in the Profit and Loss section for 2020 is:

Problem 2: Assuming that Zamboanga Company reclassified the investment to financial asset measured at FVOCI:

a. The gain (loss) recognized and reported in the Profit and Loss section for 2019 is:

b. The carrying value of the bonds reported in the December 31, 2020 balance sheet is:

c. The gain (loss) recognized and reported in the Profit and Loss section for 2020 is:

Reference no: EM132669989

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