On January 1, 2020, RED Company purchased 12% bonds with face amount of ₱5,000,000 for ₱5,500,000 which included a transaction cost of ₱100,000. The bonds provide an effective yield of 10%. The bonds are dated January 1, 2020, mature on January 1, 2025 and pay interest annually on December 31 of each year. The bonds are quoted at 115 on December 31, 2020. The entity irrevocably elected to use the fair value option. What amount of interest income should be reported for 2020?

Answer rating: 100% (QA)

Answer i Step 1 The financial instrument is recognized at f... View the full answer