Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Could you please help me with this? Thank you 8. On January 1, 2014, Sun Company purchased the debt instruments of Silk Company with a

Could you please help me with this? Thank you

image text in transcribed
8. On January 1, 2014, Sun Company purchased the debt instruments of Silk Company with a face value of P5,000,000 bearing interest rate of 8% for P4,621,006 to yield 10% interest per year. The bonds mature on January 1, 2019 and pay interest annually on December 30. On December 31, 2014 the fair value of the investment is P4,838,014 98 which is based on the prevailing market rate of 9%. Question 1. If the company's business model has the objective of trading and making a profit from changes in the fair value of the securities, what amount of unrealized gain or loss should the company disclose in their December 31, 2014 profit or loss? Question 2. If the company's business model has the objective of collecting all the contractual cash flows including interest and principal, at what amount should the investment be reported in the company's statement of financial position for the year ended December 31, 2014

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Theodore E. Christensen, David M. Cottrell, Cassy Budd

13th International Edition

1265042616, 9781265042615

Students also viewed these Accounting questions