On September 1, 2021, Howell Company purchased 600 of the P1,000 face value, 9% bonds of Ramsey, Incorporated, for P625,000 (an 8% effective interest rate). The bonds, which mature on September 1, 2026, pay interest semiannually on March 1 and September 1. Assuming that Howell uses the effective interest method of amortization and that the bonds are appropriately classified as non-trading, the net carrying value of the bonds should be shown on Howell's December 31, 2021, statement of financial position at a.) P600,000 b.) P625,000 c.) P622,333 d.) P623,667
On September 1, 2021, Howell Company purchased 600 of the P1,000 face value, 9% bonds of Ramsey, Incorporated, for P625,000 (an 8% effective interest rate). The bonds, which mature on September 1, 2026, pay interest semiannually on March 1 and September 1. Assuming that Howell uses the effective interest method of amortization and that the bonds are appropriately classified as non-trading, the net carrying value of the bonds should be shown on Howell's December 31, 2021, statement of financial position at a.) P600,000 b.) P625,000 c.) P622,333 d.) P623,667
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 1MC
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On September 1, 2021, Howell Company purchased 600 of the P1,000 face value,
9% bonds of Ramsey, Incorporated, for P625,000 (an 8% effective interest rate). The bonds, which mature on September 1, 2026, pay interest semiannually on March 1 and September 1. Assuming that Howell uses the effective interest method of amortization and that the bonds are appropriately classified as non-trading, the net carrying value of the bonds should be shown on Howell's December 31, 2021, statement of financial position at
9% bonds
a.) P600,000
b.) P625,000
c.) P622,333
d.) P623,667
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