On January 1, 2021, Magnesium Company purchased 3,000 of the P1,000 face value, 9%, 5-year debt...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2021, Magnesium Company purchased 3,000 of the P1,000 face value, 9%, 5-year debt instruments of MG Company. The debt instruments mature on January 1, 2026 and pay interest annually beginning December 31, 2021. The debt instruments were purchased to yield an 11% rate of interest. The bonds were classified as Investment at amortized cost. Present value factors were as follows: PV factor of 11% after 5 periods PV factor of ordinary annuity of 11% after 5 periods 0.593451 3.695897 On July 1, 2022, Magnesium sold P1,000,000 face value at a prevailing market rate of 10.5%. As a result of the sale, the management decided to change its current business model to a business model in managing the financial assets wherein any changes in fair value of the investment are taken to profit or loss. The fair value of investment on December 31, 2022 is 10% and remained unchanged at the end of 2023. How much is the carrying value of investment that should be reported in the statement of financial position on December 31, 2022? On January 1, 2021, Magnesium Company purchased 3,000 of the P1,000 face value, 9%, 5-year debt instruments of MG Company. The debt instruments mature on January 1, 2026 and pay interest annually beginning December 31, 2021. The debt instruments were purchased to yield an 11% rate of interest. The bonds were classified as Investment at amortized cost. Present value factors were as follows: PV factor of 11% after 5 periods PV factor of ordinary annuity of 11% after 5 periods 0.593451 3.695897 On July 1, 2022, Magnesium sold P1,000,000 face value at a prevailing market rate of 10.5%. As a result of the sale, the management decided to change its current business model to a business model in managing the financial assets wherein any changes in fair value of the investment are taken to profit or loss. The fair value of investment on December 31, 2022 is 10% and remained unchanged at the end of 2023. How much is the carrying value of investment that should be reported in the statement of financial position on December 31, 2022?
Expert Answer:
Answer rating: 100% (QA)
IFRS 9 allows reclassification of investments only when the entity changes its business model for ma... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324659139
11th edition
Authors: Loren A. Nikolai, John D. Bazley, Jefferson P. Jones
Posted Date:
Students also viewed these accounting questions
-
Gretta Company holds a debt investment at amortized cost of $ 8,500. At December 31, 2014, the fair value of the investment is $ 8,000 and the present value of the future cash flows from the debt...
-
Briefly describe the kinds of information that should be reported in the statistical section of the CAFR.
-
Q1. Calculate the amounts that should be reported for (L) and (Z) on the 9/28/2008 balance sheet: (L) = ___________ million (Z) = ___________ million Q2. What was the beginning balance of the...
-
How could not having a strategy hurt a brand on social media? What are some content ideas for those who are at the "Awareness" stage of the sales funnel? What does it mean to A/B test on a social...
-
Beta Corporation has the following shareholders equity accounts Common stock at par ........... $ 5,000,000 Paid-in capital in excess of par ....... 2,000,000 Retained earnings ...............
-
Distinguish between leadership and a leader; differentiate a designated from an emergent leader.
-
States There are 50 state capitols in the United States. Determine whether the given value is a statistic or a parameter.
-
Cerner Company has two fringe benefit plans for its employees: 1. It grants employees 2 days vacation for each month worked. Ten employees worked the entire month of March at an average daily wage of...
-
2. Solve the eigenvalue problem associated with the x operator in a rectangular coordinate system subject to a Neumann boundary condition at x = 0 and a Robin boundary condition at x = 1. Thus, do/dx...
-
The operations manager at Sebago Manufacturing is considering three proposals for supplying a critical component for its new line of electric watercraft. Proposal one is to purchase the component,...
-
You are in the final stages of your audit of the financial statements of Ozine Corporation for the year ended December 31, 2014, when the corporation's president consults you. The president believes...
-
Check the following 2 codes carefully and what will happen, if the following codes are executed. public class Family { String[] members; //-- // Constructor: Sets up this family by storing the...
-
There has been a lot of discussion and debate lately as to how to make TSA more efficient while still maintaining a secure airport. After the 11 Attacks, President Bush signed the Aviation and...
-
At 5.46 x 1014 Hz, the energy given off by a black body is 1.52 x 10-17 J. How many photons of this frequency are emitted?
-
A projectile is fired in Earth's gravitational field with a horizontal velocity of v = 8.35 m/s. How far does it go in the horizontal direction in 0.451 s? [Round your answer to the nearest...
-
Among various forms of social stratification, which do you believe engenders the most detrimental consequences and adverse impacts on our society?
-
A woman deposits R dollars every 3 months beginning February 17, 2009 and ending on August 17, 2012. She begins deposits of 2R dollars every 3 months on November 17, 2012 and continues until May 17,...
-
Explain why it is not wise to accept a null hypothesis.
-
On October 23, Johnson Company purchased $100,000 of inventory on credit with payment terms of 1/15, net 45. Using the net price method, prepare journal entries to record Johnson Companys purchases...
-
Use the information in RE21-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a direct financing lease....
-
On January 1, 2005, the Borstad Company purchased a factory for $180,000 and machinery for $1 million. It is depreciating the factory over 30 years and the machinery over 20 years, both by the...
-
Can you think of at least four types of organisation that are not primarily concerned with making profits?
-
Assume a business owns a 50 percent stake in a gold mine. As this ownership stake will not give control over the whole of the gold mine, can this resource be regarded as an asset of the business?
-
Does the fact that the level of inventories (and, perhaps, of other factors) may not be typical of their levels at other times in the reporting period pose a problem for external users seeking to...
Study smarter with the SolutionInn App