Reference no: EM132973870
Question -
A) On January 1, 2017, Gilberto 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, 2017 and mature on December 31, 2026 and pay interest annually on December 31. The interest method of amortizing bond discount is used.
1) What amount should be reported as interest revenue for 2017?
2) What amount should be reported as interest revenue for 2018?
B) On January 1, 2017, Queen Company purchased bonds with a face amount of P5,000,000 for P4,760,000. The method used is Fair value thru OCI. The bonds mature on December 31, 2019 and pay 10% interest annually on December 31 with a 12% effective yield. The bonds are quoted at 102 on December 31, 2017 and 105 on December 31, 2018. The bonds are sold on June 30, 2019 plus accrued interest.
1) What amount of unrealized gain should be reported as component of other comprehensive income for 2017? and 2018?
1. 268,800
2. 100,000
3. 340,000
4. 339,056
5. 221,200
6. 70,256
7. 0
2) What amount should be recognized as gain on sale of the bond investment on June 30, 2019?
1. 544,528
2. 794,528
3. 250,000
4. 589,056
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: Gilberto Company purchased 9% bonds with a face amount of P4,000,000 for P3,756,000 to yield 10%. What amount should be reported as interest revenue for 2017
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