Reference no: EM133005786
Question - On January 1, 2019, JYP Company purchased P1,200,000, 14% bonds of PSY Company for P1,352,143, a price that yields 10%. Interest on these bonds is payable every December 31. The bonds mature on December 31, 2022. On April 1, 2021, to pay a maturing obligation, JYP sold P720,000 face value bonds at 101 plus accrued interest. Market value of the bonds on different dates is as follows:
December 31, 2019 112
December 31, 2020 108
December 31, 2021 105
Assume that the bonds were designated as at fair value through other comprehensive income.
-What amount of Fair value adjustment should be recognized on December 31, 2020?
-What amount should interest income will be taken to profit or loss for the year ended December 31, 2021?
-What amount of Fair value adjustment should be recognized on December 31, 2021?
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