What is the carrying amount of the bonds on date of sale

Assignment Help Financial Accounting

Reference no: EM132661452

Problem 1: What is the carrying amount of the bonds on date of sale?

On January 1, 2015, an entity purchased bonds with face amount of P5,000,000 for P4,760,000 including transaction cost of P160,000. The business model is to collect contractual cash flows and sell the financial assets. The bonds mature on December 31, 2017, and pay 10% annual interest on December 31 with 12% effective yield. Assume that the market value of the bonds on December 31, 2016 is 105 and the bonds are sold on June 30, 2017 at 119 plus accrued interest.

Problem 2: What is the amount of gain on sale of the bonds?

Reference no: EM132661452

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