Extracted text: Problem 21-3 (IFRS - From amortized cost to FVPL) On January 1, 2020, Soledad Company purchased 10% bonds with face amount of P3,000,000. The bonds mature on January 1, 2030 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 for this investment is to collect contractual cash flows composed of interest and principal. On December 31, 2021, the entity changed the business model for this investment to realize fair value changes. On January 1, 2022, the fair value of the bonds was P2,845,000 at an effective rate of 11%. Required: 1. Prepare a table of amortization using the effective interest method for 2020 and 2021. 2. Compute the loss on reclassification. 3. Prepare journal entries for 2020, 2021 and 2022.
Extracted text: Problem 20-6 (IAA) On January 1, 2020, Gallant Company purchased bonds with face amount of P8,000,000 for P7,679,000 to be measured at amortized cost. The stated rate on the bonds is 10% but the bonds are acquired to yield 12%. The bonds mature at the rate of P2,000,000 annually every December 31 and the interest is payable annually also every December 31. The entity uses the effective interest method of amortizing discount. Required: a. Prepare journal entries for 2020. b. Compute the carrying amount of the bond investment on December 31, 2020.