Reference no: EM132577941
Question 1: On December 31, 2015, Bell Co. issued P2, 000,000, 8% serial bonds, to be repaid in the amount of P400, 000 each year. Interest is payable annually on December 31.
The bonds were issued to yield 10% a year. The bond proceeds were P1, 902,800 based on the present values at December 31, 2015 of the five annual payments as follows:
Due Date Principal Due Interest Due Present Value at 12/31/15
12/31/16 400,000 160,000 P509, 000
12/31/17 400,000 128,000 436,100
12/31/18 400,000 96,000 372,500
12/31/19 400,000 64,000 316,900
12/31/20 400,000 32,000 268,300
P1,902,800
In its December 31, 2016 statement of financial position, at what amount should Bell report the carrying amount of the bonds?
a. P 1,393,800
b. P 1,491,000
c. P 1,502,800
d. P 1,533,080
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