Intermediate accounting 1

554 Chapter 10 How much is the gain or loss on the sale? What is the journal entry? e. Assume all the bonds were sold on July 1, 20x3 at 98. Transaction costs incurred on the sale amounted to P38,000. How much is the gain or loss on the sale? What is the journal entry? 2. On January 1, 20x1, Sleek Co. acquired 2,000, P1,000 face amount, 10% bonds from Mimi, Inc. for P1,937,950. The bonds mature on December 31, 20x4; however, interest is due annually every December 31. The bonds are measured at amortized cost. The effective interest rate is 11%. Requirements: a. Prepare the amortization table. b. Prepare all the journal entries. c. How much is the unamortized discount or premium on December 31, 20x2? d. How is the investment presented in the Dec. 31, 20x2 statement of financial position (i.e., whether current asset or noncurrent asset or partly both)? e. Assume all the bonds were sold on January 1, 20x3 at 98. Transaction costs incurred on the sale amounted to P40,000. How much is the gain or loss on the sale? What is the journal entry? f. Assume half of the bonds were sold on July 1, 20x3 at 108. Transaction costs incurred on the sale amounted to P20,000. How much is the gain or loss on the sale? What is the journal entry? 3. On April 1, 20x1, SRV Co. acquired P2,000,000 face amount, 12% bonds, dated January 1, 20x1, at 98 excluding interest. The bonds are measured at amortized cost. Requirement: Provide the entry to recognize the bonds.Investments in Debt Securities 555 On Jan. 1, 20x1, Coal Plant Co. purchased P4,000,000, 12% bonds for P4,166,027. The bonds mature in four equal annual installments, plus interest on the outstanding principal balance, every Dec. 31. The bonds are measured at amortized cost. The effective interest rate is 10%. Requirements: a. Provide the journal entries. b. Determine the current and noncurrent portions of the investment on Dec. 31, 20x1. 5. On Jan. 1, 20x1, Steamed Rooster Co. acquired P100,000 face value, 10% bonds for P94,738. The bonds, together with accrued interests, are due on Dec. 31, 20x3. The bonds are measured at amortized cost. The effective interest rate is 12%. Requirements: a. How much are the carrying amounts of the interest receivable on Dec. 31, 20x1 and Dec. 20x2, respectively? b. How much are the carrying amounts of the investment on Dec. 31, 20x1 and Dec. 20x2, respectively? c. Prepare all the journal entries. 6. On Jan. 1, 20x1, White Co. acquired P1,000,000 face amount, 10% bonds of Beans Co. for P907,135. The bonds mature on Dec. 31, 20x3 and pay annual interest every Dec. 31. The effective interest rate is 14%. The bonds are to be held under a "hold to collect and sell" business model. Information on fair values is as follows: December 31, 20x1......... ....98 December 31, 20x2. .102 White Co. sold all the bonds on Jan. 1, 20x3 at 101. Requirement: Prepare all the journal entries