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What is the value of the investment on december

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Reference no: EM133010782

On January 1, 2019, Woot Company purchased 12% bonds with face amount of P5,000,000 for P5,500,000 including transaction cost of P100,000. The bonds provide an effective yield of 10%.

  • The bonds are dated January 1, 2019 and pay interest annually on December 31 of each year.
  • The bonds are quoted at 115 and 112 on December 31, 2019 and December 31, 2020 respectively. New effective interest rate for 2020 is 8%. This bond was held for trading.
  • The entity changed its business model into FVOCI on January 1, 2020.

Problem 1: How much is the interest income for 2020?

a. 550,000
b. 600,000
c. 460,000
d. 575,000

Problem 2: What is the value of the investment on December 31, 2020?

a. 5,750,000
b. 5,600,000
c. 5,610,000
d. 5,000,000

Reference no: EM133010782

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