For the next five (5) questions: On January 1, 2022, when the prevailing market rate on similar instruments was at 7%, DEF Corporation acquired P3,000,000, 10-year bonds of RST Company. Transaction costs of P243,114.27 were incurred in the purchase, resulting to a new effective interest rate of 6%. The bonds will be accounted as a financial asset at fair value through other comprehensive income and will pay interest of 9% every June 30 and December 31. The fair value of the bonds at year- end are presented below: 103 99 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 101 102 December 31, 2026 104 Bonds with face value of P1,000,000 were sold at 101 on June 30, 2024 after interest was collected. 8) After updating the related investment's fair value, what is the balance of Unrealized Gain or Loss - OCI to be "recycled" to the income statement in 2024? (Indicate if debit or credit)

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 6RE: Refer to the information in RE13-5. Assume that on June 30, Aggie received interest on the Smith...
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For the next five (5) questions:
On January 1, 2022, when the prevailing market rate on similar instruments was at 7%, DEF Corporation acquired
P3,000,000, 10-year bonds of RST Company. Transaction costs of P243,114.27 were incurred in the purchase, resulting to
a new effective interest rate of 6%. The bonds will be accounted as a financial asset at fair value through other
comprehensive income and will pay interest of 9% every June 30 and December 31. The fair value of the bonds at year-
end are presented below:
103
December 31, 2022
December 31, 2023
December 31, 2024
99
101
December 31, 2025
102
December 31, 2026
104
Bonds with face value of P1,000,000 were sold at 101 on June 30, 2024 after interest was collected.
8) After updating the related investment's fair value, what is the balance of Unrealized Gain or Loss - OCI to be "recycled"
to the income statement in 2024? (Indicate if debit or credit)
Transcribed Image Text:For the next five (5) questions: On January 1, 2022, when the prevailing market rate on similar instruments was at 7%, DEF Corporation acquired P3,000,000, 10-year bonds of RST Company. Transaction costs of P243,114.27 were incurred in the purchase, resulting to a new effective interest rate of 6%. The bonds will be accounted as a financial asset at fair value through other comprehensive income and will pay interest of 9% every June 30 and December 31. The fair value of the bonds at year- end are presented below: 103 December 31, 2022 December 31, 2023 December 31, 2024 99 101 December 31, 2025 102 December 31, 2026 104 Bonds with face value of P1,000,000 were sold at 101 on June 30, 2024 after interest was collected. 8) After updating the related investment's fair value, what is the balance of Unrealized Gain or Loss - OCI to be "recycled" to the income statement in 2024? (Indicate if debit or credit)
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