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What is the correct interest income be reported

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Reference no: EM132803157

Question - On January 1, 2019, CPA Company purchased debt securities which carry a 10% fixed interest for P765,540 to be held as investment at amortized cost. The securities have face value of P600,000, and interests are receivable semi-annually every June 30 and December 31. The prevailing market interest rate of the debt securities of this type is 7%.

On October 31, 2020, CPA Company sold 40% of the securities including any accrued interest for a gain of P5,250.

Required - The following are the 3 questions:

What is the total amount received by CPA Company on the sale of the 40% bond investment on October 31, 2020?

What is the correct interest income be reported in the December 31, 2020 Statement of Comprehensive Income?

What is the carrying value of the bond investment on December 31, 2020?

Reference no: EM132803157

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