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...

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.