Reference no: EM132995810
Question - On April 1, 2019, ACT 185 Company purchased P 2,000,000, 12% bonds of NU Company for P1,750,374.82, a price that yields 15%. Interest on these bonds is payable every March 31. The bonds mature on March 31, 2026. At initial recognition, the investment is held in the business model of collecting contractual cash flows and selling the financial assets. On July 1, 2023, to pay a maturing obligation, ACT 185 sold all of the bonds at 106.5 plus accrued interest.
Quoted price of the bonds on different dates are as follows: December 31, 2019 - 105;
December 31, 2020 - 106;
December 31, 2021 - 105.5;
December 31, 2022 - 107;
December 31, 2023 - 107.5;
December 31, 2024 - 108 and December 31, 2025 - 107.
Required -
1. How much is the interest revenue for the year 2020?
2. What amount should the debt investment be reported on December 31, 2021?
3. How much is the unrealized gain/loss taken to other comprehensive income for the year 2022?
4. How much is the carrying value of the investment on December 31, 2022?
5. How much is the interest income for year 2023?
6. How much is the carrying value of the investment as of December 31, 2023?
7. How much is the gain or loss on sale of debt investment recognized on the date of sale?
8. How much is the effect on the profit or loss section of the statement of comprehensive income relating to transactions for the year 2023?
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