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What amount of gain or loss should holy company recognize

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Reference no: EM132702911

Derecognition of Debt Investments

On January 2, 2020, Holy Company invested in a 4-year 10% bond with a face value of P3,000,000 in which interest is to be paid every December 31. The bonds has an effective interest rate of 8% and was acquired for P3,198,728. Holy Company has designated the debt instrument as investment at amortized cost. On December 31, 2022, Holy Company sold the bonds at the prevailing rate of 12%.

Problem 1: What amount of gain or loss should Holy Company recognize on the sale of the security? What amount of interest income should Holy Company report in its 2021 statement of income?

Reference no: EM132702911

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