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Find what amount should be reported as interest income

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Reference no: EM132697743

On July 1, 2020, an entity purchased an 8%, 4-year, P4,000,000 face value bonds for P3,746,400. The bonds are dated July 1, 2020 and pays interest every June 30. Effective rate of the bonds is 10% and to be held as financial assets at amortized cost. The entity used the effective interest method.

Problem 1: What amount should be reported as interest income for 2021?

Group of answer choices

Option 1: 320,000

Option 2: 380,000

Option 3: 374,640

Option 4: 377,372

Reference no: EM132697743

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