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Compute the carrying amount of the investment in bonds

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Reference no: EM132790742

Question - On may 21 1020, an entity acquired P 1,600,000 9% bonds at 97 plus accrued interest. Interest bond is payable semiannually on March 1 and September 1 and bonds mature on September 1, 2023. The entity intended to hold these bond until they mature.

Due to an isolated events that is beyond the entity control, the entity sold bonds of 480,000 for 103 plus accrued interest on May 1, 2021.

On July 1, 2022, bonds of 640,000 were exchanged for 90,000 Ordinanry shares, to par value, qouted on the market on this date 8 per share. Interest was received on bonds to date of exchage.

On September 1, 2023, remaining bonds were redeemed and accrued interest was received.

Use straight line method.

Compute for the total interest income for 2020.

Compute for the carrying amount of the investment in bonds as at December 31, 2020.

Reference no: EM132790742

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