On January 1, 2021, an entity purchased marketable equity securities for P5,000,000. The equity securities qualify as a financial asset held for trading. The entity also paid P50,000 as commission to the broker. At year-end, the trading securities have a fair value of P6,000,000. The increase in fair value should be recorded with: a.A credit to Financial asset - FVPL, P1,000,000 b.A debit to Unrealized gain - OCI, P1,000,000 c.A debit to Financial asset - FVPL, P1,000,000 d.A debit to Unrealized gain - P/L, P1,000,000
Q: On October 1, 2020, Close Corporation purchased a 12% P 3,000,000 face amount bond issue for…
A: In case of bond acquired between two coupon payment dates, the accrued interest is first received…
Q: Swifty Company purchased, on January 1, 2020, as an available-for-sale security, $90,000 of the 7%,…
A: SOLUTION- JOURNAL ENTRY IS USED TO RECORD A BUSINESS TRANSACTION IN THE ACCOUNTING RECORDS OF A…
Q: On January 1, 2018, an entity purchased bonds with face amount of P5,000,000. The entity paid…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: On January 1, 2020, Dumaguete Company purchased bonds with face amount of P4,000,000 for P4,206,000.…
A: ANSWER The business model is to hold the asset until redemption, but sales may be made to invest…
Q: On January 1, 2021, BEZOS COMPANY acquired 10%, 3-year bonds with face value of $ 2,000,000.…
A: Equity instruments: fair value through profit or loss (FVPL): Assets (FVPL) are recorded at fair…
Q: anuary 1, 2026 and were purchased for P5,550,000 to yeild 11%. The entity classified the bondss as…
A: Price of bond is the present value of coupon payment and the present value of the par value of the…
Q: At December 31, 2020, the available-for-sale debt investment for Zorro Community Bancorp has…
A: Other comprehensive income is that income which is not the part of profit and loss(P/L) account.…
Q: In the google form, provide the interest income to be recorded on that same day.
A: On 01.01.2021, ABC purchased bonds and total face value = P6000000 Interest rate = 8% payable every…
Q: Presented below is selected information related to the financial instruments of Pronghorn Company at…
A: At reporting date all financial assets are valued at fair value.
Q: On January 1,2019, DEF Company purchased 456B Corporation, 9% bonds with a face value of P 4,000,000…
A: Interest revenue for 2019 = P3,756,000 * 10% = P375,600 Interest received for 2019 = P4,000,000 * 9%…
Q: On October 1, 2020, Beondegi Company purchased as debt investments at fair value through profit or…
A: Interest accrued on October 1, 2020 = Face value of bonds x ratre of interest x no. of months/12 =…
Q: In its first year of operations, Oriole Corporation purchased available-for-sale debt securities…
A: Fair value of the securities means actual replacement value of the securities in the market.…
Q: An investor company purchased $716,000 of 4% bonds from the investee company on January 1, 2020,…
A: When the corporation buys securities with the intention to resell them or not hold them till…
Q: On Jan. 1, 2021, an entity bought an investment in bonds with a face value of P3,000,000 for…
A: “Since you have asked multiple sub-parts, we will solve the first three sub-parts for you. If you…
Q: On January 1, 2018 Alexes Company purchased market marketable equity securities to be held as…
A: Unrealized gain is the one which is reported in the books due to increase in the worth of securities…
Q: On January 1,2019, DEF Company purchased 456B Corporation, 9% bonds with a face value of P 4,000,000…
A: Interest revenue to be recognized in 2019 = P3,756,000 * 10% = P375,600 Interest paid for the year…
Q: On October 1, 2021, POGI company purchased 4000 of the P1000 face amount, 10% bonds of GANDA Company…
A: The carrying value of a bond means the net amount between the bond's face value plus any…
Q: In 2019, Osgood Corporation purchased $8.5 million worth of 10-year municipal bonds at face value.…
A: Loss on investment is the difference in fair value of the investment from the value it was…
Q: On January 1, 2020, DEF Company purchased equity securities for P18,000,000. The entity paid the…
A: The fair value change on the financial instrument that is measured at FVOCI is an unrealized…
Q: On October 1, 2019, Kite Corporation purchased a debt security having a face value of P3,000,000…
A: Investment in debt securities is the investment in the debenture of the company which is a debt for…
Q: Presented below is selected information related to the financial instruments of Pronghorn Company at…
A: Journal entry to record the fair value for the bonds payable at December 31 2020 is as follows:
Q: Swifty Company purchased, on January 1, 2020, as an available-for-sale security, $90,000 of the 7%,…
A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…
Q: On January 1, 2020, Soledad Company purchased 10% bonds with face amount of P3,000,000. The bonds…
A: Profit or loss on reclassification is the difference between the revised carrying value and…
Q: No investments were sold during 2021. All securities except Security D and Security F are considered…
A: Reported on Balance Sheet as: Unrealized gain (loss) included in: Current…
Q: On January 1, 2021, BEZOS COMPANY acquired 10%, 3-year bonds with face value of $ 2,000,000.…
A: Given data, Face value of Bond=$2,000,000 Coupon rate=10% Market rate=8%
Q: On Jan. 1, 2021, an entity bought an investment in bonds with a face value of P3,000,000 for…
A: Bonds are debt instruments issued to raise money from the investors. When these bonds are issued at…
Q: On January 1, 2019, Dumaguete Company purchased bonds with face amount of P4,000,000 for P4,206,000.…
A: Initial recognition of bonds = P4, 206,000 Interest will be paid on face value
Q: Items 36 to 39 are based on the following :On January 1, 2020, Tanzania Company purchased bonds with…
A: The business concept is to keep the asset until it is redeemed, however sales might be made to…
Q: On January 1, 2016, Star Company received P107,720 for a P100,000 face amount, 12% bond, a price…
A: One of the source used by the business entities to meet their financial requirements is issue of…
Q: An investor company purchased $491,000 of 8% bonds from the investee company on January 1, 2020,…
A: Particulars Amount Cost of Bond Investment on Jan.1,2020 $755470 Add: Amortization of Discount…
Q: On January 1, 2021, an entity purchased marketable equity securities for P5,000,000. The equity…
A:
Q: On January 1, 2019, Davao de Oro Company purchased bonds with a face amount of P5,000,000. The…
A: Bond amortization schedule (effective interest…
Q: S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27,…
A: The unrealized gain on the bond investment is recognized through OCI, and on derecognition of…
Q: On January 1, 2020, Liam Company purchased bonds with face amount of P10,000,000 for P10,515,000.…
A: Bonds Face amount = P 10000000 Cash paid for bonds = P 10515000 December 31 , 2020 bonds are quoted…
Q: On January 1, 2019, Pacita Corp. purchased marketable equity securities to be held for trading…
A: For measurements under FVTOCI the transaction cost will be debited to profit or loss account…
Q: On January 1, 2019, Davao de Oro Company purchased bonds with a face amount of P5,000,000. The…
A: On 01.01.2019, Davao de Oro company purchased bonds of face amount = P5000000 Entity paid = P4600000…
Q: For several years Fister Links Products has held Microsoft bonds, considered by the company to be…
A:
Q: On Jan. 1, 2021, ABC purchased bonds for the purpose of both collecting the contractual cash flows…
A: Given: ABC purchased bonds based on the purpose of both that includes the contractual cash flows…
Q: On January 1, 2020, Royalty Company purchased 9% bonds with face amount of P6,000,000. The bonds…
A: Given that, On 01.01.2020, Royalty company purchased amortized bonds Bond face value = P6000000…
Q: On January 1, 2020, Soledad Company purchased 10% bonds with face amount of P3,000,000. The bonds…
A: NOTE : As per BARTLEBY guidelines, when multiple questions are given, then first question is to be…
Q: What is the interest income for 2020? a. P280,000 b. P400,000 c.P248,080 d. P354,400 53. What is…
A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…
Q: Ɔn January 1, 2020, the securities to be held for trading purposes for P2,000,0 company also paid…
A: Other Comprehensive Income (OCI) OCI is prepared to recognize the income/expense/gain/loss which is…
Q: On October 1, 2021, Valorant Company purchased a debt security having a face value of P3,000,000…
A: In case of investment in debt security is measured at FVTOCI ,initially the investment should…
Q: On January 1, 2021, Aruba Company purchased 10% bonds with a face amount of P5,000,000 at…
A: Unrealized gain/loss means the amount which refers to an increase/decrease in the value of…
Q: Sandhill Company purchased, on January 1, 2020, as an available-for-sale security, $69,000 of the…
A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…
Q: On October 1, 2021, Neon Company purchased a P2,000,000 face value 10% debt instrument paying a…
A: A profit and loss financial statement that illustrates a company's revenue and spending over a…
Q: On July 1, 2018, ABC Company borrowed P1,000,000 on a 10% five-year note payable. On December 31,…
A:
Q: On January 1, 2021, RUDOLPH Company received ₱107,720 for a ₱100,000 face amount, 12% bond, a price…
A: Semiannual interest payment = face value of bonds x rate of interest x 6/12 = 100000*12%*6/12 =…
Q: On April 1, year 1, the entity purchased P200,000 face value, 9% Treasury Notes for P198,500,…
A: On April 1 of Year 1, Company purchased face value = P200000 Cost of purchase of 9% of Treasury…
Q: At December 31, 2021, Hull-Meyers Corp. had the following investments that were purchased during…
A: The correct answer for the above mentioned question is given in the following steps for your…
On January 1, 2021, an entity purchased marketable equity securities for P5,000,000. The equity securities qualify as a financial asset held for trading. The entity also paid P50,000 as commission to the broker.
At year-end, the trading securities have a fair value of P6,000,000.
The increase in fair value should be recorded with:
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 lossAt December 31, 2022, available-for-sale debt securities for Storrer, Inc. are as follows. The securities are considered to be a long-term investment. Security. Cost. Fair Value A $17,500 16,000 B 12,500 14,000 C 23,000 21,000 53,000 51,000 A. Prepare the adjusting entry at December 31, 2022 to report the securities at fair value. B- Show the statement presentation at December 31,2022, after adjustment to fair value. C- E. Kretsinger, a member of the board of directors, does not understand the reporting of the unreal- ized gains or losses. Write a letter to Ms. Kretsinger explaining the reporting and the purposes that it serves.On Jan. 1, 2021, an entity bought an investment in bonds with aface value of P3,000,000 for P2,946,500. The investment wasrecorded as a financial asset at fair value through OCI. It pays aninterest rate of 7% to be paid every Dec. 31. It matures on Dec. 31,2022. On Dec. 31, 2021, the bonds have a total fair value ofP2,970,000. Give the amount of the following using good accounting form:a. Investment in Bonds as of acquisitionb. Interest income for the yearc. Unrealized Holding Gain/Loss through OCI for year 2021d. Investment in Bonds as of Dec. 31, 2021e. If in 2021, there was a change in business model to holdingthe investment until maturity only, what is the compoundjournal entry to reclassify the asset and update relevantaccounts
- On Jan. 1, 2021, an entity bought an investment in bonds with aface value of P3,000,000 for P2,946,500. The investment wasrecorded as a financial asset at fair value through OCI. It pays aninterest rate of 7% to be paid every Dec. 31. It matures on Dec. 31,2022. On Dec. 31, 2021, the bonds have a total fair value ofP2,970,000. Provide the answer for the following: a. Investment in Bonds as of Dec. 31, 2021 b. If in 2021, there was a change in business model to holding the investment until maturity only, what is the compound journal entry to reclassify the asset and update relevant accounts.On January 1, 2018, an entity purchased bonds with face amount of P5,000,000. The entity paid P4,500,000 plus transaction cost of P168,600. The bonds mature on December 31, 2020 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds were quoted at 105 on December 31, 2018 and 110 on December 31, 2019.The business model in managing the financial asset is to collect contractual cash flows that are solely payments of principal and interest and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2019, the entity changed its business model to collect only contractual cash flows. On December 31, 2020, the bonds are quoted at 115 and the market interest rate is 10%. find the following: 1. What amount of unrealized gain should be reported as component of OCI in the statement of comprehensive income for 2018? 2. What amount of unrealized gain should be reported as component of OCI in the statement of…At December 31, 2022, available-for-sale debt securities for Pharoah, Inc. are as follows. The securities are considered to be a long-term investment. Security (a) A B C Total Cost $16,985 12,930 21,760 $51,675 Fair Value $16.030 15,179 18,160 $49,369 Prepare the adjusting entry at December 31, 2022, to report the securities at fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Dec. 31 Debit Credit
- On January 1, 2021, Aruba Company purchased 10% bonds with a face amount of P5,000,000 at P4,760,000. The bonds payable effective rate is 12%. The bonds are dated January 1, 2019, and pay interest annually on December 31 of each year. The bond's quoted price on December 31, 2021, is P102. The entity has irrevocable use the fair value at other comprehensive income. Determine the Unrealized gain - OCI, December 31, 2021.On January 1, 2019, ZZZ Company purchased bonds with face amount of P5,000000. The entity paid P4,500,000 plus transaction costs of P168,600. The bonds mature on December 31, 2022 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2019 and 110 on December 31, 2020. The business model in managing the financial asset is to collect contractual cash flows and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2020, the entity changed the business model to collect only contractual cash flows. On December 31, 2021, the bonds are quoted at 115 and the market rate of interest is 10%. What mount of cumulative unrealized gain should be reported as component of OCI in the statement of changes in equity for 2020?On January 1, 2019, ZZZ Company purchased bonds with face amount of P5,000000. The entity paid P4,500,000 plus transaction costs of P168,600. The bonds mature on December 31, 2022 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2019 and 110 on December 31, 2020. The business model in managing the financial asset is to collect contractual cash flows and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2020, the entity changed the business model to collect only contractual cash flows. On December 31, 2021, the bonds are quoted at 115 and the market rate of interest is 10%.what amount should be reported as interest income for 2021?
- On January 1, 2019, ZZZ Company purchased bonds with face amount of P5,000000. The entity paid P4,500,000 plus transaction costs of P168,600. The bonds mature on December 31, 2022 and pay 6% interest annually on December 31 each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2019 and 110 on December 31, 2020. The business model in managing the financial asset is to collect contractual cash flows and also to sell the bonds in the open market. The entity has not elected the fair value option. On December 31, 2020, the entity changed the business model to collect only contractual cash flows. On December 31, 2021, the bonds are quoted at 115 and the market rate of interest is 10%. What is the carrying amount of the investment on December 31, 2021?At December 31, 2021, Hull-Meyers Corp. had the following investments that were purchased during 2021, its first year of operations: Trading Securities: Security A Security B Totals Securities Available-for-Sale: Security C Security D Totals Securities to Be Held-to-Maturity: Security E Security F Totals Trading Securities Security A Security B Securities Available-for-Sale Security C Security D Securities to be Held-to-Maturity Security E Security F Totals Amortized cost Reported on Balance Sheet as: Current assets $ 905,000 110,000 $1,015,000 Noncurrent assets $ 705,000 905,000 $1,610,000 $ 495,000 620,000 $1,115,000 No investments were sold during 2021. All securities except Security D and Security F are considered short-term investments. None of the fair value changes is considered permanent. Required: Complete the following table. (Amounts to be deducted should be indicated with a minus sign.) Fair Value $915,500 104,900 $1,020,400 $ 784,500 920, 200 $1,704,700 Net Income (I/S) $…On Jan. 1, 2021, an entity bought investment in bonds and classifiedit as an investment at amortized cost. It has a total face value ofP5,000,000 and an acquisition cost of P5,088,700. It pays an interestrate of 6%, to be paid semiannually every June 30 and Dec. 31. Itmatures on Dec. 31, 2024. The acquisition resulted to an effectiveinterest rate of 5.5%. On Dec. 31, 2021, the bonds have a total fairvalue of P5,010,000. Identify the following: a. Interest income for the year b. Unrealized Holding Gain/Loss through P/L for year 2021 c. Investment in Bonds as of Dec. 31, 2021