Investment in Debt Securities (Trading, FA at FVOCI and FA at Amortized Cost)

Problem 6. On January 1, 2020, Smart Inc. invested in Bond Securities of Globe Inc. The face value of the bonds is P1,000,000 with a term of 3 years. The nominal interest rate of the bonds is 10% and the interest is payable annually on December 31. The yield rate of this bond is 12%. The fair values of the bonds are as follows:

December 31, 2020 900,000

December 31, 2021 1,100,000

December 31, 2022 800,000

Required: Based on the result of your audit, determine the following:

Assumption Trading Security FA at FVOCI FA at AC

Initial Measurement

Interest Income in 2020

Interest Income in 2021

Book Value on 12/31/2020

Book Value on 12/31/2021

Unrealized Holding Gain (Loss) P/L 12/31/2020

Unrealized Holding Gain (Loss) P/L 12/31/2021

Unrealized Holding Gain (Loss) OCI 12/31/2020 (IS)

Unrealized Holding Gain (Loss) OCI 12/31/2021 (IS)

Unrealized Holding Gain (Loss) OCI 12/31/2021 (SFP)