TOPICS: INVESTMENTS/DERIVATIVESOn January 1, 2018, H Company purchased bondsfrom I CO. with face amount of P 3 500 000. Thebusiness model in managing the financial assets is tocollect contractual cash flow that are solely paymentsof principal and interest and also to sell the bonds inthe open market. The entity paid 3 680 250 for thebond investment.The bonds mature on December 31, 2020 and pay10% interest annually on December 31 each year with8% effective yield.The bonds are quoted at 95 on December 31, 2018 and90 on December 31, 2019. What is the carrying amount of the bondinvestment to be reported in December 31,2018?What is the unrealized gain or loss that shouldbe reported as component of othercomprehensive income in December 31,2018?What amount of interest income will bereported in December 31, 2019What amount of cumulative unrealized gain orloss should be reported in the statement ofchanges in equity for 2019?Assume that H elected to value investments atmarket price. At what amount should H recordthe investment in December 31, 2019?How would you solve this? Thanks! On January 1, 2018, H Company purchased bondsfrom I CO. with face amount of P 3 500 000. Thebusiness model in managing the financial assetscollect contractual cash flow that are solely paymentsof principal and interest and also to sell the bonds inthe open market. The entity paid 3 680 250 for thebond investment.The bonds mature on December 31, 2020 and pay10% interest annually on December 31 each year with8% effective yield.The bonds are quoted at 95 on December 31, 2018 and90 on December 31, 2019.14. What is the carrying amount of the bondinvestment to be reported in December 31,2018?15. What is the unrealized gain or loss that shouldbe reported as component of othercomprehensive income in December 31,2018?16. What amount of interest income will bereported in December 31, 201917. What amount of cumulative unrealized gain orloss should be reported in the statement ofchanges in equity for 2019?18. Assume that H elected to value investments atmarket price. At what amount should H recordthe investment in December 31, 2019?

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Answered: On January 1, 2018, H Company purchased…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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TOPICS: INVESTMENTS/DERIVATIVES

On January 1, 2018, H Company purchased bonds
from I CO. with face amount of P 3 500 000. The
business model in managing the financial assets is to
collect contractual cash flow that are solely payments
of principal and interest and also to sell the bonds in
the open market. The entity paid 3 680 250 for the
bond investment.
The bonds mature on December 31, 2020 and pay
10% interest annually on December 31 each year with
8% effective yield.
The bonds are quoted at 95 on December 31, 2018 and
90 on December 31, 2019.

What is the carrying amount of the bond
investment to be reported in December 31,
2018?
What is the unrealized gain or loss that should
be reported as component of other
comprehensive income in December 31,
2018?
What amount of interest income will be
reported in December 31, 2019
What amount of cumulative unrealized gain or
loss should be reported in the statement of
changes in equity for 2019?
Assume that H elected to value investments at
market price. At what amount should H record
the investment in December 31, 2019?

How would you solve this? Thanks!

On January 1, 2018, H Company purchased bonds
from I CO. with face amount of P 3 500 000. The
business model in managing the financial assets
collect contractual cash flow that are solely payments
of principal and interest and also to sell the bonds in
the open market. The entity paid 3 680 250 for the
bond investment.
The bonds mature on December 31, 2020 and pay
10% interest annually on December 31 each year with
8% effective yield.
The bonds are quoted at 95 on December 31, 2018 and
90 on December 31, 2019.
14. What is the carrying amount of the bond
investment to be reported in December 31,
2018?
15. What is the unrealized gain or loss that should
be reported as component of other
comprehensive income in December 31,
2018?
16. What amount of interest income will be
reported in December 31, 2019
17. What amount of cumulative unrealized gain or
loss should be reported in the statement of
changes in equity for 2019?
18. Assume that H elected to value investments at
market price. At what amount should H record
the investment in December 31, 2019?

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