Problem - Investment in Debt Secutiry.docx

Problem - Investment in Debt Secutiry.docx - Problem 1 On...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Problem 1: On October 1, 2015, Nakakalo Co., acquired 2,000 of P1,000 face value, 12% 5-year bonds of Nalolo Co., at a market yield of 11% . Nakakalo Co., also paid brokers commission of P34,274.32. The bonds are dated January 1, 2015, and pays interest semi-annually every June 30, and December 31. Nakakalo Co., manage this type of investment using amortized cost model. On March 1, 2017, Nakakalo Co., sold 500 of the bonds at a market yield of 11%. On the same day, the company wrote a check in payment of the commission to the broker equal to P6,250. Compute for (1) Effective Rate of the Bonds, (2) Total cash paid related to the acquisition of investment, (3) Interest Income for the year ended December 31, 2016, (4) Carrying Value December 31, 2016, (5) Proceeds from Sale of Investment, (6) Gain or Loss from Sale of Investment, (7) Interest Income for the year ended December 31, 2017. If during 2017, Nakakalo Co., has to change its business model to Fair Value Model, and that the fair value of the bond at December 31, 2017 and December 31, 2018 were 102 and 101 respectively. Compute for (8)
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern