Paombong Corp. purchased P200,000 8% bonds for P184,557 on January 1, 2008. Paombong classified the bonds as debt investment through FVOCI. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2013. Paombong uses the effective interest method to amortize premium or discount. On January 2, 2010, the fair value of the bonds did not change from the previous reporting period end. On this date, Paombong sold the bonds for its fair value after receiving interest to meet its liquidity needs.

The market values of the bond are as follows:

Dec. 31 2008 190,449.00

December 31, 2009 186,363.00

Based on the above and the result of your audit, determine the following:

1) Interest income for the year 2008 2) Unrealized holding gain as of December 31, 2008

3) Interest income for the year 2009

4) Unrealized holding gain as of December 31, 2009

5) Realized gain or loss on sale on January 2, 2010

On June 1, 2009, Pandi Corporation purchased as a long term investment 4,000 of the P1,000 face value, 8% bonds of Violet Corp. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on Dec 1 and June 1. The bonds mature on June 1, 2015. Pandi uses the effective interest method of amortization. On November 1, 2010, Pandi sold the bonds for a total consideration of P3,925,000. Pandi intended to hold these bonds until they matured, so year-to-year market fluctuations were ignored in accounting for bonds.

Based on the above, answer the following

: 1) The purchase price of the bonds on June 1, 2009 is

2) The interest income for the year 2009 is

3) The carrying amount of the investment in bonds as of Dec. 31, 2009 is

4) The interest income for the year 2010 is

5) The gain on sale of investment in bonds on Nov. 1, 2010 is

On April 1, 2010, Moncada Corp. purchased 5-year P10,000,000 10% bonds dated January 1, 2010. The bonds were purchased to yield 12%. Interest is payable annually every December 31. Moncada Corp. has the positive intention and ability to hold these bonds to maturity. The issuer paid the interest as scheduled in 2010 and 2011. During 2012, the issuer of the bonds is in financial difficulties and it becomes probable that the issuer will be put into administration by a receiver. On Dec. 31, 2012, Moncada estimated that none of the interest will be collected and only P8,000,000 of the principal will be collected on maturity date. No cash flows are received during 2013. At the end of 2013, the issuer is released from administration and Moncada receives a letter from the receiver stating that the issuer will be able to meet its remaining obligations, including interest and repayment of principal.

Based on the above, answer the following:

1) How much was the total amount paid to acquire the investment in bonds on April 1, 2010?

2) How much is the carrying amount of the investment in bonds on Dec. 31, 2010?

3) How much should be recognized as impairment loss in 2012?

4) How much is the interest income to be recognized in 2013?

5) How much should be recognized as reversal of impairment loss in 2013?