Question
On June 1, 2019, Hated Corporation purchased an investment 9,000 of the P1,000 face value, 8% bonds of Pira Corporation. Hated Corporations business model for
On June 1, 2019, Hated Corporation purchased an investment 9,000 of the P1,000 face value, 8% bonds of Pira Corporation. Hated Corporations business model for this type of asset is to collect contractual cash flows consisting of principal and interest payments. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on December 1 and June 1. The bonds mature on June 1, 2025. On November 1, 2020, Hated Corporation sold the bonds for a total consideration of P8,831,250 Requirements: Based on the above and the result of your audit, determine the following: (Round off present value factors to four decimal places) (2 points each):
The purchase price of the bonds on June 1, 2019 is? The carrying amount of the investment in bonds as of December 31, 2019 is? The interest income for the year 2020 is? The gain on sale of investment in bonds on November 1, 2020 is?
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