Required: (Use continuous factors and round off all computations to the nearest peso.) 1. Assume the business model of James Co. is to collect contractual cash flows. What is the carrying amount of the investment in bonds on December 31, 2019? Round off effective interest rate to nearest two decimal places. e.g. 12.3456% -> 12.34%, 12.19999% -> 12.20%, 0.0920001 -> 0.0920 or 9.20% 2. Assume the bonds are classified as "trading securities." The fair value on December 31. 2019 is 96. If P1,000,000 face value bonds are sold at 97 plus accrued interest on November 1, 2020, how much is the total cash received from the sale? 3. Assume that the bonds are classified as "Financial Asset-FVOCI." The fair value on December 31, 2019 is 96. What is the balance of unrealized gain/(loss)-OCI on December 31, 2019? If it is an unrealized loss, input a hyphen (-) before your answer. e.g. -1,234
On April 1, 2019, James Co. purchased 9%, P4,000,000 face
P3,740,000. In addition, James Co. paid P10,000 commission and P11,727 taxes related to
the purchase. The bonds are dated April 1, 2019 and will mature on April 1, 2022. Interest
is paid every April 1 and October 1.
Required: (Use continuous factors and round off all computations to the nearest peso.)
1. Assume the business model of James Co. is to collect contractual cash flows. What is
the carrying amount of the investment in bonds on December 31, 2019? Round off
effective interest rate to nearest two decimal places. e.g. 12.3456% -> 12.34%,
12.19999% -> 12.20%, 0.0920001 -> 0.0920 or 9.20%
2. Assume the bonds are classified as "trading securities." The fair value on December 31.
2019 is 96. If P1,000,000 face value bonds are sold at 97 plus accrued interest on
November 1, 2020, how much is the total cash received from the sale?
3. Assume that the bonds are classified as "Financial Asset-FVOCI." The fair value on
December 31, 2019 is 96. What is the balance of unrealized gain/(loss)-OCI on
December 31, 2019? If it is an unrealized loss, input a hyphen (-) before your answer.
e.g. -1,234
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