On January 1, 2020, Columbia Company purchased 9% bonds with a face amount of P4,000,000 for P3,756,000 to yield 10%. The bonds are dated January 1, 2020, mature on December 31, 2029, and pay interest annually on December 31. The bonds are measured at amortized cost.

5. What amount should be reported as interest revenue for 2020?

A. 344,400 C. 375,600 E. None of the above

B. 400,000 D. 360,000

On Jan. 1, 2020, Panama Company received P2,154,400 for 12% bonds with face amount of P2,000,000. The bonds were sold to yield 10%. Interest is payable semiannually every January 1 and July 1. The company elected the fair value option for measuring financial liabilities.

On December 31, 2020, the fair value of the bonds is P2,129,200. The change in fair value of the bonds is attributable to market factors.

6. What is the carrying amount of the bonds payable on January 1, 2020?

A. 2,000,000 C. 1,000,000 E. None of the above

B. 2,129,200 D. 2,154,400

7. What is the gain or loss from change in fair value of the bonds payable for 2020?

A. 129,200 loss C. 25,200 loss E. None of the above

B. 129,200 gain D. 25,200 gain

8. What is the carrying amount of the bonds payable on December 31, 2020?

A. 2,000,000 C. 2,129,200 E. None of the above

B. 2,154,400 D. 2,129,840