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What amount should the investment be initially recorded

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Problem 1: On May 1, 2014, Golden Company purchased a short-term P4,000,000 face value 9% debt instruments for P3,720,000 excluding the accrued interest and classified it as an investment to profit or loss which is based on the business model of the entity to buy and sell portfolio of securities and to make profit for short-term movements in the market rate of interest. Golden Company incurred and paid P20,000 transaction cost related to the acquisition of the instrument. The debt instruments mature on January 1, 2017, and pay interest semi-annually on January 1 and July 1. On December 31, the fair market value of the instruments is P3,880,000. On February 2. 2015, Graham Company sold the debt security for P3,960,000. At what amount should the investment be initially recorded?

Reference no: EM132844197

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