On January 1, 2020, MINA Company purchased, on cash basis, debt securities for P765,540. The securities have a face value of P600,000 and mature in 15 years. The securities carry fixed interest of 10% that is receivable semi-annually on June 30 and December 31.  The prevailing market interest rate on these debt securities is 7% compounded semi-annually.  MINA intends and has the financial resources to hold these securities to maturity.                 Required :  Using the effective interest method,

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A: Bonds are considered to be debt of company for which it needs to pay regular interest to the…

Q: On January 1,2020, Jerry Conpany acquired P6,000,000 of 12% face value bonds at P5,650,500 to be…

A: Annual interest payment =face value of bonds x rate of interest x year = P6,000,000 x 12% x 1 year =…

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A: The effective interest rate uses the carrying amount of the bond to calculate interest income.…

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A: Unrealized gain (loss) reported in other comprehensive income for the year 2019: Unrealized gain…

Q: On January 1, 2019, AB Company purchased P1,000,000, 12% bonds of C Company for a price that yields…

A: Debt Investment: It is fixed-interest generating securities  to earn a steady interest income and…

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A: Reclassification of Debt Instrument As a result debt securities may be reclassified from the…

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A: Sinking fund are created for the bonds so that sufficient amount get accumulated at the end of…

Q: On January 1, 2010, Rambutan Corporation purchased debt securities for cash of P765,540. The…

A: Rambutan Corporation purchased debt securities at P765,540 which carries the interest rate of 10%…

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A: Bonds are the debt security which is offered or issued by the corporates or the governments to…

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A: Discount on company’s bonds  = 500000-475126= 24874 interest =8% x 500000 = 40000 interest income at…

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A: The Purchase price of the bond = Present Value of Interest  + Present value of Bond at Maturity.…

Q: On January 1, 2020, Hole Company purchased 600 of $1,000 face value, 8% bonds of Lid Corp., for…

A: Given, Face value = $600,000 Issue price = $553,670   Discount on bonds payable = $600,000 -…

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A: Journal entries  Dec. 31, 2021 Bank(3000000 * .09) Dr. 270000 Interest income(3050000 * .08) Cr…

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A: The amortization of bond is to be done in order to pay down the principal on debt regularly in…

Q: interest inco

A:

Q: On January 1, 2020, Metlock Company acquires $ 110,000 of Spiderman Products, Inc.,  9% bonds at a…

A:

Q: Francis Company’s

A: A bond may be a mounted financial gain instrument that represents a loan created by associate degree…

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A: Definition of interest revenue: Revenue received on lending the money is called interest revenue.…

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A: Principal amount = $335,000 (335*$1,000) Market interest rate = 11% Interest = $36,850 t = 10 years…

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A: Bond is a low risk - low return investment instrument which provides a regular interest payment and…

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A: Purchase price of serial bond = Present value of annual interest  payments  discounted at Yeild per…

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A: Income statement refers to those financial statements which depicts the revenues and expenses of a…

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A: Given as, Face value 500000 Coupon rate 8% Issue price 475126 Life of bond 3…

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A: Accounting is essential to operating a company since it allows businesses to track income and…

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A: Issue price of the bonds = Present value of principal + Present value of interest payments where,…

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A: Under the amortized cost method, present value of the bond can be calculated by discounting all the…

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A: Bonds represent high-security financial products that allow a company to acquire money and meet…

Q: . On January 1, 2020, HIBISCUS Company purchased 4,000 of ₱1,000 face value, 10% bonds of IXORA…

A: Given Data: Face value of bonds = 4,000 bonds at ₱ 1,000 Par value = ₱ 4,000,000 Carrying value of…

Q: What is the initial cost of the debt investment?   2. What is the carrying amount of the debt…

A: Initial cost of the debt investment is the cost which has been paid by the company (which is OP…

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A: The current price of a bond is the total value for which a bondholder will be able to purchase the…

Q: On January 1,2019, DELO Company purchased 456B Corporation, 9% bonds with a face value of P4,000,000…

A: Interest revenue is the amount of interest that an entity might have earned during a period.

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A: Issue price of the bonds = Present value of principal + Present value of interest payments where,…

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A: Held to Maturity securities are the securities held by the entry with the intention to retain it…

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A: The held-to-maturity debt investment account is classified as a long-term investment account. The…

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A: A sinking fund is a fund that is used by a corporation at the time of need of the funds. This fund…

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A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

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A: Purchase Price of Bond: The price of a bond is the current discounted value of the future cash flow…

Q: On June 1, 2020, LM company purchased debt investment at amortized cost, 8,000 of P1,000 face value…

A: Investment in bonds: Investment in bonds is the scenario where the company acquires bonds either at…

Q: On January 1, 2019, QQQ Company purchased bonds with face amount of P5,000,000 for P4,760,000…

A: Given: On January 1, 2019, QQQ Company purchased bonds with face amount of P5,000,000 for P4,760,000…

Q: On June 1, 2019, YODA CORP. acquired a 5-year, 10%, P1,000,000 face value bonds at 92. The company…

A: Accumulated other comprehensive income (OCI) includes unrealized gains and losses reported in the…

Q: On January 1, 2020, Ye Company purchased 8% bonds in the face amount of P4,000,000. The bonds mature…

A: If the entity changes their classification from FVOCI to FVTPL then the unrealized gain/ loss are…

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A: Bond Bond is a source of finance issued by the firm to raise money. It has a fixed Interest rate…

Q: On January 1, 2020, HIBISCUS Company purchased 4,000 of ₱1,000 face value, 10% bonds of IXORA…

A: A bond is a financial instrument that is issued by large business entities and government bodies to…

Q: nds is 9% on December 31, 2020. Round off present value factors to four (4). decimal places and…

A: The answer has been mentioned below.

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A: The fair value of the financial instrument is determined by their present value by using the market…

Q: On January 1, 2016, Covid Corp., purchased debt securities for cash of P765,540 to be held as…

A:

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A: Discount = Face value of bonds - Amount received = $110000-99611 = $10389 Cash received= Face value…

Q: n January 1, 2020, Blue Company purchased P500,000 8% bonds for P475,126 (including broker’s…

A: Solution Given Face value 500000 Coupon rate 8% Issue price 475126 Life of…

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A: Grana Inc. purchased 13% bond P 500,000 Yield = 10%  Duration = 5 years  Lets suppose par value bond…

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A: Recognized income=Selling price-Purchase price

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.