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What amount of unrealized loss should be reported

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Question - Use the following information for questions - On January 01, 2016, Dumag Company purchased bonds with face amount of P 4,000,000 for P 4,206,000. The business model in managing financial asset is to collect contractual cash flows that are solely payments of principal and interest and also to sell the bonds in the open market. The bonds mature on December 31, 2018 and pay 10% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 95 on December 31, 2016 and 90 on December 31, 2017.

1. What amount of unrealized loss should be reported as component of other comprehensive income in 2016?

a. 342,480 c. 469,520

b. 406,000 d. 0

2. What amount of unrealized loss should be reported as component of other comprehensive income in 2017?

a. 473,878 c. 200,000

b. 131,398 d. 0

Reference no: EM132951133

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