Chloe Glenn Company acquired P6,000,000, 5-year bonds with a stated rate of 10% on January 1, 2020. The bonds were acquired to yield 8%. Interest is payable annually on December 31. At the end of the reporting period, the bond yields as follows: December 31, 2020 - 9% December 31, 2021 - 11% December 31, 2022 - 10% Requirements: 1. Prepare the necessary journal entries to record the above transactions assuming the investment is classified as trading security? Investment at FVTOCI? Investment at amortized cost? 2. Compute the unrealized holding gain or loss of the investment, assuming the investment is classified as trading security? Investment at FVTOCI? Investment at amortized cost? 3. How much is the carrying value of the investment at each reporting period assuming the investment is classified as trading security? Investment at FVTOCI? Investment at amortized cost?

Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
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PROBLEM 22
Chloe Glenn Company acquired P6,000,000, 5-year bonds with a stated rate of 10% on January 1,
2020. The bonds were acquired to yield 8%. Interest is payable annually on December 31. At the end
of the reporting period, the bond yields as follows:
December 31, 2020 - 9%
December 31, 2021 - 11%
December 31, 2022 - 10%
Requirements:
1. Prepare the necessary journal entries to record the above transactions assuming the investment
is classified as trading security? Investment at FVTOCI? Investment at amortized cost?
2. Compute the unrealized holding gain or loss of the investment, assuming the investment is
classified as trading security? Investment at FVTOCI? Investment at amortized cost?
3. How much is the carrying value of the investment at each reporting period assuming the
investment is classified as trading security? Investment at FVTOCI? Investment at amortized
cost?

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