Reference no: EM132884983
Eddie Corporation acquired a P5,000,000, 5-year, 10% bonds for P5,195,000 on January 1, 2020. The bond's effective interest is 9%. Interest is payable every December 31. The objective of buying the investment is for collecting contractual cash flows. On December 31, 2020, the objective of the company's business model for managing the investment has changed from collecting contractual cash flows to realizing a profit. The fair value of the bond on December 31, 2020, is P5,330,000. The effective rate on this date is 8%. The asset is quoted at 102 on December 31, 2021
Problem 1. What reclassification type is this?
Problem 2. What is the interest income in 2020?
Problem 3. What is the carrying amount of the asset on December 31, 2020?
Problem 4. What is the remeasurement gain as a result of the reclassification?
Problem 5. What is the carrying amount of the asset on December 31, 2021?
Problem 6. What is the unrealized holding loss on 2021?
Problem 7. What is the interest income in 2021?
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