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What amount shall be taken to equity as a result

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Reference no: EM132933272

Question - On January 1, Year 1, Grow Company purchased P1,000,000, 12% bonds of Glow 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, Year 4. On April 1, Year 3, to pay a maturing obligation, Grow sold P600,000 face value bonds at 101 plus accrued interest. Market value of the bonds on different dates is as follows:

December 31, Year 1 108

December 31, Year 2 106

December 31, Year 3 104

The bonds were classified as at Fair Value through Other Comprehensive Income.

Requirements -

a. What amount shall be taken to equity as a result of properly measuring the investments on December 31, Year 2?

b. How much is interest income for the year ended December 31, Year 2?

c. What should be the balance of Unrealized Gains or Losses presented as part of equity on December 31, Year 3?

Reference no: EM132933272

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