Reference no: EM132946889
Question - On June 1, Year 1, South Company purchased 4,000 of the P1,000 face value, 8% bonds of State Corporation for P3,691,500. The bonds were purchased to yield 10% interest. Interest is payable semi - annually on December 1 and June 1. The bonds mature on June 1, Year 5. On November 1, Year 4, South sold the bonds for P3,925,000. This amount includes the appropriate accrued interest. Market value of the bonds at the end of each reporting period follows:
December 31, Year 1 - 97
December 31, Year 2 - 99
December 31, Year 3 - 98
Requirement - Prepare the entries in the books of South for Year 1 and Year 2, including the adjustments at December 31, as a result of all the foregoing assuming that the securities are classified as:
-debt investments at amortized cost.
-debt investments at fair value through profit or loss.
-debt investments at fair value through other comprehensive income.
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