On January 1, 2019, DB Company purchase 9% bonds in the face amount of P6,000,000. The bonds mature on January 1, 2024 and were purchased for P5,555,000 to yield 11%.
The entity classified the bonds as held for trading and interest is payable annually every December 31. The entity provided the following information about the fair value of the bonds and effective rate, respectively:
December 31, 2019- P5,450,000; 12% December 31, 2020- P6,155,000; 8%
On December 31, 2020, the entity changed the business model for this investment to collect contractual cash flows composed of principal and interest. On January 1, 2021, the fair value of the bonds did not change. How much is the unrealized gain on December 31, 2020?
A.P600,000
B.P155,000
C.PO
D.P705,000