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On July 1, 2020, Sprakenheit Company purchased P500,000 face value Swazzeg Company 8% bonds for P455,000 (with accrued interest) to yield 10%. The bonds were designated as at fair value through profit or loss. The bonds mature on January 1, 2024 and pay interest annually on January 1. On December 31, 2020, the bonds had a market value of P472,500. On February 14, 2021, Sprakenheit sold the bonds for P460,000 plus accrued interest.   On its December 31, 2020 statement of comprehensive income, what amount should Sprakenheit report as unrealized gain or loss?

On July 1, 2020, Sprakenheit Company purchased P500,000 face value Swazzeg Company 8% bonds for P455,000 (with accrued interest) to yield 10%. The bonds were designated as at fair value through profit or loss. The bonds mature on January 1, 2024 and pay interest annually on January 1. On December 31, 2020, the bonds had a market value of P472,500. On February 14, 2021, Sprakenheit sold the bonds for P460,000 plus accrued interest.   On its December 31, 2020 statement of comprehensive income, what amount should Sprakenheit report as unrealized gain or loss?

Intermediate Accounting: Reporting And Analysis
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 1RE
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On July 1, 2020, Sprakenheit Company purchased P500,000 face value Swazzeg Company 8% bonds for P455,000 (with accrued interest) to yield 10%. The bonds were designated as at fair value through profit or loss. The bonds mature on January 1, 2024 and pay interest annually on January 1. On December 31, 2020, the bonds had a market value of P472,500. On February 14, 2021, Sprakenheit sold the bonds for P460,000 plus accrued interest.

 

On its December 31, 2020 statement of comprehensive income, what amount should Sprakenheit report as unrealized gain or loss?

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