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How much is the loss on change in the fair value of bonds

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Q1. On January 1, 2021, Aruba Company reported bonds payable of P5,000,000 and a related unamortized discount of P275,000.

On that day, the entity retired bonds of 2,500,000 of the outstanding bonds at face amount plus a call premium of P80,000.

How much is the loss on the early retirement of bonds in 2021?

Q2. On January 1, 2021, Mexico Company issued bonds payable with a face amount of P5,000,000 and a stated rate of 12% at P90. The entity paid a bond issue cost of P200,000.

The bonds have a 5-year term and interest is payable annually every December 31.

The entity elected the fair value option. On December 31, 2021, the fair value of the bonds is P108.

It is reliably determined that the fair value increase comprised P200,000 attributable to credit risk and the remainder attributable to change in the market interest rate.

How much is the loss on change in the fair value of bonds?

Reference no: EM133177812

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