How much should be reported as interest expense

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Question 1 - On Jan. 1, 2021, Blue Corporation borrowed P500,000 on an 8%, non-interest-bearing note due in four years. The present value of the note on Jan. 1, 2021 was P367,500. The entity elects the fair value option for reporting financial liabilities. On Dec. 31, 2021, it is determined that the fair value of the note is P408,150. How much should the discount on note payable be presented on Dec. 31, 2021?

Question 2 - Green Corporation had the following notes at 12% interest payable at maturity. The Corp. paid each note on scheduled maturity date.

Date

Amount

Maturity Date

Term

11/1/2020

P860,000

10/31/2021

1 year

2/1/2021

1,440,000

7/31/2021

6 months

5/1/2021

2,500,000

1/31/2022

9 months

The corp. recorded interest expense when the notes are repaid. As a result, interest expense of P189,600 was recorded in 2021. How much should be reported as interest expense for 2021?

Reference no: EM133094816

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