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What amount of gain or loss should Covid recognize

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Question - On January 1, 2020, Covid Company purchased P1,000,000, 12% bonds of Lugaw Company for P1,063,394, a price that yields 10%. Interest on these bonds is payable every December 31. The bonds mature on December 31, 2023. On April 1, 2022, to pay a maturing obligation. Covid sold P600,000 face value bonds at 101 plus accrued interest. Market Value of the bonds on different dates is as follows:

-December 31, 2020 108

-December 31, 2021 106

-December 31, 2022 104

Assume that the company intended to collect the principal and interest over the term of the bonds and did not choose the fair value option.

-At what amount should the bond investments be shown on December 31, 2021 statement of financial position?

-What amount of gain or loss should Covid recognize on the sale of investments on April 1, 2022? Indicate whether GAIN or LOSS.

-What amount of interest income will be taken to profit or loss for the year ended December 31, 2022?

-At what amount should the bond investments be shown on December 31, 2022 statement of financial position?

Reference no: EM132926460

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