Solve 37 Items 36 to 39 are based on the following :On January 1, 2020, Tanzania Company purchased bonds withface amount of P4,000,000 for P4,206,000. The business model of the entity in managing the financialasset is to collect contractual cash flows that are solely payment of principal and interest and also to sell thebonds in the open market. The entity has not elected the fair value option of measuring financial asset. Thebonds mature on December 31, 2022 and pay 10% interest annually on December 31 each year with 8%effective yield.The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021.36. What amount of unrealized loss should be reported as component other comprehensive income in2020?37. What amount of unrealized loss should be reported as component of other comprehensive income in2021?

The company's goal is to keep the asset until it is paid off, however sales may be undertaken to…

tems 36 to 39 are based on the following :On January 1, 2020, Tanzania Company purchased bonds with ace amount of P4,000,000 for P4,206,000. The business model of the entity in managing the financial sset is to collect contractual cash flows that are solely payment of principal and interest and also to sell the onds in the open market. The entity has not elected the fair value option of measuring financial asset. The onds mature on December 31, 2022 and pay 10% interest annually on December 31 each year with 8% effective yield.The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021. 6. What amount of unrealized loss should be reported as component other comprehensive income in 2020? 7. What amount of unrealized loss should be reported as component of other comprehensive income in 021?

tems 36 to 39 are based on the following :On January 1, 2020, Tanzania Company purchased bonds with ace amount of P4,000,000 for P4,206,000. The business model of the entity in managing the financial sset is to collect contractual cash flows that are solely payment of principal and interest and also to sell the onds in the open market. The entity has not elected the fair value option of measuring financial asset. The onds mature on December 31, 2022 and pay 10% interest annually on December 31 each year with 8% effective yield.The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021. 6. What amount of unrealized loss should be reported as component other comprehensive income in 2020? 7. What amount of unrealized loss should be reported as component of other comprehensive income in 021?

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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LO.4, 7 In December 2019, Carl Corporation sold land it held as an investment. The corporation received 50,000 in 2019 and a note payable (with adequate interest) for 150,000 to be paid in 2021. Carl Corporations cost of the land was 80,000. The corporation has a 90,000 net capital loss carryover that will expire in 2019. Should Carl Corporation report the sale in 2019 or use the installment method to report the income as payments are received?
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On January 1, 2020, Aguilar Corporation purchased bonds with a face value of P4,000,000 forP3,649,600 in order to collect contractual cash flows that are solely payments of principal and interest.The bonds are purchased to yield 10% interest. The nominal interest rate on the bonds is 8% payableannually every December 31.On December 31, 2021, as a result of a change in the business model for managing financial assets,the entity decided to reclassify the bonds from amortized cost to fair value. On that date, the carryingamount of the bond investment is P3,744,016 after discount amortization using the effective interestmethod. The market value of the bonds on January 1, 2015, is 10%. Requirements: 1. Preparethe necessary journal entries to record the transactions using the change is from fair value to amortized cost.
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