On January 1, 2021, Illuminati Company purchased 10% bonds with a face amount of P3,000,000. The bonds mature on January 1, 2031, and were purchased for P3,405,000 to yield 8%. The entity used the effective interest method of amortization and interest is payable annually every December 31. The business model for this investment is to collect contractual cash flows composed of interest and principal. On December 31, 2022, the entity changed the business model for this investment to realize fair value changes. On January 1, 2023, the fair value of the bonds was P2,845,000 at an effective rate of 11%. How much is the gain or loss on reclassification? O 502,592 gain O 502,592 loss

On January 1, 2021, Illuminati Company purchased 10% bonds with a face amount of P3,000,000. The bonds mature on January 1, 2031, and were purchased for P3,405,000 to yield 8%. The entity used the effective interest method of amortization and interest is payable annually every December 31. The business model for this investment is to collect contractual cash flows composed of interest and principal. On December 31, 2022, the entity changed the business model for this investment to realize fair value changes. On January 1, 2023, the fair value of the bonds was P2,845,000 at an effective rate of 11%. How much is the gain or loss on reclassification? O 502,592 gain O 502,592 loss

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 3MC: On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9%...

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During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
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