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How much is the increase in the carrying amount of the bond

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Question 1: On January 1, 2015, London Company issued its 9% P2 million bonds, which mature on January 1, 2025. The bonds were issued for P1, 878,000 to yield 10% resulting in a bond discount of P122, 000. Interest is payable annually on December 31.

What is the carrying value of the bonds at December 31, 2015?

a. P 1,885,800

b. P 1,896,000

c. P 1,896,780

d. P 1,898,000

Question 2: On January 1, 2015, when the market rate for bond interest was 12%, Victoria Corporation issued P10 million face amount of bonds with interest to be paid semi-annually at a 10% annual rate every June 30 and December 31. The bonds mature on December 31, 2024 and were issued at a discount of P1, 145,000.

How much is the increase in the carrying amount of the bond liability from January 1 to June 30, 2015?

a. P 11,450

b. P 31,300

c. P 57,250

d. P696,667

Reference no: EM132577973

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