Question
Bebot, Inc. holds debt securities within a business model whose objective is achieved both by collecting contractual cash flows and selling the debt securities. The
Bebot, Inc. holds debt securities within a business model whose objective is achieved both by collecting contractual cash flows and selling the debt securities. The contractual cash flows are solely payments of principal and interest on specified dates. The entity purchased a 5-year, 7%, P1,000,000 bonds on December 31, 2018, for P1,086,565. The bonds were purchased to yield 5% interest. Annual interest is paid every December 31.
The fair values of the bonds by the end of each year are presented as follows:
Date | Fair Value |
December 31, 2019 | 1,065,000 |
December 31, 2020 | 1,075,000 |
December 31, 2021 | 1,056,500 |
December 31, 2022 | 1,030,000 |
December 31, 2023 | 1,000,000 |
What amount should be reported as investment in bonds in the statement of financial position as of December 31, 2020?
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