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What is the interest income

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Problem - On January 1, 2017, Company A purchased bonds with face amount of Php 6,000,000 with nominal rate of 9%. The bonds were purchased for Php 5,555,000 to yield 11% and mature on January 1, 2022. The bonds were held for trading and interest payable annually every December 31. Below are information about the bonds:

 

Fair value

Effective rate

December 31, 2017

5,450,000

12%

December 31, 2018

6,155,000

8%

The entity changed the business model for this investment to collect contractual cash flows composed of principal and interest on December 31, 2018. On January 1, 2019, the fair value of the bonds did not change. What is the interest income for 2019?

Reference no: EM132767153

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