What is the initial cost of the debt investment? 2. What is the carrying amount of the debt investment on December 31, 2020?
What is the initial cost of the debt investment? 2. What is the carrying amount of the debt investment on December 31, 2020?
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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On December 31,2019, OP company purchased debt investment at amortized cost P3,000,000 serial bonds with a nominal interest rate of 10% and effective rate of 13%. Bonds with a face value of P1,000,000 mature on December 31, 2020 and every December 31 thereafter. Present value at 13% are as follows: 1 period-0.885; 2-periods-0.783; 3 periods-0.693.
1. What is the initial cost of the debt investment?
2. What is the carrying amount of the debt investment on December 31, 2020?
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