Reference no: EM132846328

Questions -

Q1. On January 1, 2020, Jerusalem Company purchased P5,000,000 face amount 8% bonds for P4,562,000 to be held as financial assets at amortized cost. The bonds were purchased to yield 10% interest. The bonds mature on January 1, 2026 and pay interest annually on December 31. The interest method of amortization is used. What is the carrying amount of the bond investment on December 31, 2021?

Q2. On July 1, 2020, Jordan Company purchased ten-year, 8% bonds with a face amount of P5,000,000 for P4,200,000 to be held as financial assets at amortized cost. The bonds mature on June 30, 2028 and pay interest semiannually on June 30 and December 31. Using the interest method, the entity recorded discount amortization of P18,000 for the six months ended December 31, 2020. What amount should be reported as interest income for 2020?

Q3. On July 1, 2020, Yemen Company paid P1,198,000 for 10% bonds with a face amount of P1,000,000 to be held as financial assets at amortized cost. Interest is paid on June 30 and December 31. The bonds were purchased to yield 8%. The entity used the effective interest method. What is the carrying amount of the bond investment on December 31, 2020?

Q4. On July 1, 2020, Syria Company purchased P5,000,000 face amount, 8% bonds for P4,615,000 to yield 10% per year to be held as financial assets at amortized cost. The bonds pay interest semiannually on January 1 and July 1. On December 31, 2020, what amount should be reported as interest receivable?

Q5. On January 1, 2020, Oman Company purchased 9% bonds with a face amount of P4,000,000 for P3,756,000 to yield 10%. The bonds are dated January 1, 2020, mature on December 31, 2029, and pay interest annually on December 31. The bonds are measured at amortized cost. What amount should be reported as interest revenue for 2020?

Q6. On January 1, 2020, Egypt Company acquired P4,000,000 of 12% face amount bonds for P3,767,000 to be held as financial assets at amortized cost with a 14% effective yield. Interest on bonds is payable annually on December 31 and the bonds mature on January 1, 2024. The effective interest method of amortization is used. What is the carrying amount of the bond investment on December 31, 2020?

Q7. Libya Company purchased bonds at a discount of P100,000. Subsequently, the entity sold these bonds at a premium of P140,000. During the period that the entity held this investment, amortization of the discount amounted to P20,000. What amount should be reported as gain on sale of bonds?

Q8. Liberia Company purchased 8,000, P1,000 face amount, 9% bonds to yield 10%. The carrying amount of the bonds on January 1, 2020 was P7,800,000. The bonds mature on June 30, 2023 and pay interest semiannually on June 30 and December 31. The entity sold 4,000 bonds on March 1, 2020 for P3,920,000 after the interest has been received. What amount should be recognized as gain on sale of bonds?

Q9. On January 1, 2020, Mesopotamia Company purchased 10% bonds with face value of P5,000,000 plus transaction cost of P101,500 with a yield rate of 8%. The bonds mature on December 31, 2024 and pay interest annually on December 31. The carrying amount of the investment on December 31, 2020 using the effective interest method is P5,333,620. What is the initial acquisition cost of the bond investment?