On January 1, 2019, REP Company purchased serial bonds with face amount of P5,000,000 and stated interest at 12%. The stated interest is payable annually on December 31. The bonds are acquired to have an effective yield at 10%. The bonds mature at annual installment at 1,250,000 every December 31. Present value of 1 at 10% for one period 0.9091 Present value of 1 at 10% for two period 0.8264 Present value of 1 at 10% for three period 0.7513 Present value of 1 at 10% for four period 0.6830 What is the carrying amount of the investment on December 31, 2020?

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.