1.On January 1, 2019, Gelyka Company purchased 12% bonds with face amount of P5,000,000 for P5,500,000 including transaction cost P100,000.

The bonds provide an effective yield of 10%. The bonds are dated January 1, 2019 and pay interest annually on December 31 or each year.

The bonds are quoted at 115 on December 31, 2019. The entity has irrevocably elected to use the fair value option.

1.1What amount of gain from change in the fair value should be reported for 2019?

A.750000B. 250000C. 350000D. 0

1.2What amount of interest income should be reported for 2019?

A.600000B. 550000C. 660000D. 540000

1.3What is the carrying amount of the bond investment on December 31, 2019?

A. 5750000B. 5400000C. 5500000D. 5450000

1.4What total amount of income from the investment should be reported in the income statement for 2019?

A. 540000B. 950000C. 890000D. 900000

2.On July 1, 2020, Quagmire Company purchased 5000000 face amount, 8% bonds for 4615000 to yield 10% per year to be held as financial assets at amortized cost.

The bonds pay interest semi-annually on January 1 and July 1.

On December 31, 2020, what amount should be reported as interest receivable?

A. 184600B. 250000C. 230750D. 200000

3.On July 1, 2016, Vicar Company purchased P1,000,000 of 8% bonds for P946,000, including accrued interest of P40,000.

The bonds were purchased to yield 10% interest. The bonds mature on January 1. The entity uses interest method.

On December 31, 2016, what is the carrying amount of the bond investment?

a.911,300b.916,600c.953300d. 960600

4.On January 1, 2016, Pearl Company acquired P5,000,000 of 8% face value bonds at P4,562,000 to be held as financial assets at amortized cost with 10% effective yield.

Interest on bonds is payable annually on December 31 and the bonds mature on January 1, 2022. The effective interest method of amortization is used.

What is the carrying amount of the investment on December 31, 2017?

A.4680000B. 4662000C. 4618200D. 4562000

5.On July 1, 2020, Scheme Company acquired ten-year 8% with a face amount of P5,000,000 for P4,200,000 to be held as financial assets at amortized cost.

The bonds mature on June 30, 2028 and pay interest semi-annually on June 30 and December 31.

Using the interest method, the entity recorded discount amortization of P18,000 for the six months ended December 31, 2020.

What should be reported as interest income for 2020?

A. 168000B. 182000C. 200000D. 218000