Reference no: EM133080179
Question - Australian Open, Inc., is your audit client. In the course of your audit, you found out the on June 1, 2014, Australian Open Inc. purchased 8,000 of the P1,000 face value 8% bonds of Serena Williams Corporation for P7,383,000. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on Dec 1 and June 1. The bonds will mature on June 1, 2019. The client classified the investment as at Fair Value Through Profit or Loss.
On November 1, 2018, Australian Open Inc. sold the bonds for P7,850,000. This amount includes the appropriate accrued interest. Market value of the bond at end of each reporting period follows:
December 31, 2014 97
December 31, 2015 99
December 31, 2016 98
December 31, 2017 96
Required -
1. What is the total amount taken to P/L for the year ended December 31, 2014?
2. What is the carrying amount of the investment on December 31, 2014?
3. What is the gain or loss on the sale of investment of November 1, 2018?
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