This problem has 3 questions. On June 1, 2014, Roland Garros, Inc. purchased 8,000 of the P1,000 face value 8% bonds of Djokovic Corporation for P7,383,000. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on Dec 1 and June 1. The bonds will mature on June 1, 2019. The management of Roland Garros classifies the investment as at amortized cost.

On November 1, 2018, Roland Garros, Inc. sold the bonds for P7,850,000. This amount includes the appropriate accrued interest. Market value of the bond at the end of each reporting period follows:

December 31, 2014 97 December 31, 2015 99 December 31, 2016 98 December 31, 2017 96

15. What is the interest income for the year ended December 31, 2014?

16. What is the carrying amount of the investment on December 31, 2015?

17. What is the gain or loss from the sale on November 1, 2018?

Problem 3

This problem has 2 questions. On June 1, 2014, Wimbledon, Inc. purchased 8,000 of the P1,000 face value 8% bonds of Rafa Nadal Corporation for P7,383,000. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on Dec 1 and June 1. The bonds will mature on June 1, 2019. The management of Wimbledon, Inc. classifies the investment as at fair value but not for trading.

On November 1, 2018, Wimbledon, Inc. sold the bonds for P7,850,000. This amount includes the appropriate accrued interest. Market value of the bond at end of each reporting period follows:

December 31, 2014 97 December 31, 2015 99 December 31, 2016 98 December 31, 2017 96

18. What is the total amount of income taken to profit or loss on December 31, 2014?

19. What is the equity account balance to be reported as of December 31, 2015?

20. What is the carrying value of the investment on June 1, 2014?