Problem 11-13 On January 1, 2019, Carmona Company purchased 10% bonds in the face amount of P3,000,000. The bonds mature on January 1, 2029 and were purchased for P3,405,000 to yield 8%. The entity used the effective interest method of amortization and interest is payable annually every December 31. The business model is to collect contractual cash flows composed of interest and principal. On December 31, 2020 the entity changed the business model for this investment to realize fair value changes. On January 1, 2021, the fair value of the bonds was P2,845,000 at an effective rate of 11%. 11. What amount should be reported as interest income for 2020? a. 337,740 b. 300,000 c. 272,400 d. 270,192

Problem 11-13 On January 1, 2019, Carmona Company purchased 10% bonds in the face amount of P3,000,000. The bonds mature on January 1, 2029 and were purchased for P3,405,000 to yield 8%. The entity used the effective interest method of amortization and interest is payable annually every December 31. The business model is to collect contractual cash flows composed of interest and principal. On December 31, 2020 the entity changed the business model for this investment to realize fair value changes. On January 1, 2021, the fair value of the bonds was P2,845,000 at an effective rate of 11%. 11. What amount should be reported as interest income for 2020? a. 337,740 b. 300,000 c. 272,400 d. 270,192

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 71E

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