Find what amount of derivative asset to be reported

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Reference no: EM132775571

On Nov 3, 2020, Parker Company invests a P2,000,000 in a convertible debt instrument issued by SC Company that pays fixed interest of 7% and that can be converted into 10,000 shares in SC Company in five years at Parker's option. Otherwise the debt will pay P2,000,000 at maturity. At the time of acquisition, the conversion option has a fair value of P260,000. On December 31, 2020, the debt instrument has a fair value of P1,750,000 and the conversion option has a determinable fair value of P300,000.

Problem 1: What amount of derivative asset to be reported separately in the statement of financial position assuming the company has a business model with the objective of trading financial assets?

a. None

b. P250,000

c. P260,00

d. P300,000

Reference no: EM132775571

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