On January 1, 2020, Peru Company purchased bonds with face amount of P2,000,000 for P2,103,000. The business model of the entity in managing the financial asset is to collect contractual cash flows that are solely payment of principal and interest and also to sell the bonds in the open market. The firm has not elected the fair value option of measuring financial asset.

The bonds mature on December 31, 2022 and pay 10% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 95 on December 31, 2020 and 90 on December 31, 2021.

1. What amount of unrealized loss should be reported as component of other comprehensive income on December 31,2020?

A. 203,000 C. 171,240 E. None of the above

B. 234,760 D. 0

2. What amount of unrealized loss should be reported as component of other comprehensive income on December 31, 2021?

A. 236,939 C. 171,240 E. None of the above

B. 100,000 D. 65,699

3. What amount of cumulative unrealized loss should be reported in the statement of changes in equity on December 31, 2021?

A. 236,939 C. 303,000 E. None of the above

B. 203,000 D. 0

4. What is the carrying amount of the bond investment to be reported on December 31, 2021?

A. 1,900,000 C. 2,103,000 E. None of the above

B. 1,800,000 D. 2,336,939