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What amount of interest income should be reported

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On September 30, 2020, an entity purchased as a long-term investment in another entity's ten-year 12% bonds with a face amount of P5,000,000 for P5,503,400 including accrued interest of P150,000. Interest is payable semiannually on January 1 and July 1. The bonds mature on July 1, 2025. The entity used the straight-line method of amortization.

Problem 1: What amount of interest income should be reported in the income statement for the year ended December 31, 2020?

Group of answer choices

Option 1: 131,400

Option 2: 281,400

Option 3: 123,504

Option 4: 168,600

Reference no: EM132679388

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