Compute carrying value of bonds reported in the december

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Reference no: EM132669980

In the December 31, 2020 statement of financial position, Mine Company reported its investment in Yours Company's bonds at P1,175,570 amortized cost. The bond which has a face amount of P1,500,000, with stated rate of 6% was acquired to yield 12% will mature in December 31, 2024.

On October 30, 2021, Mine Company changed its business model for managing financial assets and reclassified its investment in Yours Company's bonds.

The fair value at October 30, 2021 and December 31, 2021 of Madrid Company's bonds were P1,200,000 and P1,275,000 respectively.

Problem 1: Assuming that Mine Company reclassified the investment to financial asset measured at FVPL:

a. The gain (loss) recognized and reported in the Profit and Loss section for 2021 is:

b. The carrying value of the bonds reported in the December 31, 2021 balance sheet is:

c. The gain (loss) recognized and reported in the Profit and Loss section for 2022 is:

Problem 2: Assuming that Mine Company reclassified the investment to financial asset measured at FVOCI:

a. The gain (loss) recognized and reported in the Profit and Loss section for 2021 is:

b. The carrying value of the bonds reported in the December 31, 2021 balance sheet is:

c. The gain (loss) recognized and reported in the Profit and Loss section for 2022 is:

Reference no: EM132669980

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