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What is the carrying amount of the financial asset on dec

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On Jan 1 2016, Ben Company purchased bonds with a face value of P 4,000,000 for P 3,500,000 plus transaction costs of P 211,618 with the business model of collecting contractual cash flows that are solely payments of principal and interest and to sell financial assets. The entity does not elect the fair value option in measuring financial assets. The bonds mature on December 31, 2020 and pay interest of 10% annually every December 31 with a 12% effective yield. The entity changed its business model for managing financial assets on December 31, 2017 to only collect contractual cash flows. The fair value of the financial asset and effective rate at the end of 2016 and each succeeding year are:

                         Fair Value           Effective Rate
12/31/2016       3875902          11%
12/31/2017      4101252           9%
12/31/2018        4293343         6%
12/31/2019        4112150           7%
12/31/2020       4000000            10%

Problem 1: What is the carrying amount of the financial asset on Dec 31, 2019?

Reference no: EM132905586

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