Find what carrying value of the bonds reported in december

Reference no: EM132669984

On January 1, 2019, Adonis Company acquired Argus Company's 8% P1,000,000 face value, seven-year term bond that pays interest every December 31. The acquisition cost amounted to P817,450 to yield 12%. Adonis Company classified the investment as financial asset measured at FVOCI.

The market value of the bonds on December 31, 2019 was P873,084 (11%).

On September 30, 2020, Adonis Company changed its business model for managing financial assets and reclassified its investment in Argus Company's bonds.

The fair value of the bonds on September 30,2020 and December 31, 2020 were P867,513 (11.5% yield) and P906,429 (10.85% yield) respectively.

Problem 1: Assuming that Adonis Company reclassified the investment to financial asset measured at FVPL:

a. The gain (loss) recognized and reported in the Profit and Loss section for 2020 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 2021 is:

Problem 2: Assuming that Adonis 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 2020 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 2021 is

Reference no: EM132669984

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