Norbin Burio.

Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS

PAS 39 or IFRS 9

A.F.S or FVTOCI

REMINDER:

1.) IN A.F.S. – DEBT SECURITY IF THE CHANGE IN FAIR VALUE IS NOT ATTRIBUTABLE TO CHANGED IN YIELD RATE,
THAT FAIR VALUE IS USED ONLY FOR REMEASUREMENT PURPOSES BUT NOT FOR AMORTIZATION PURPOSES.
THEREFORE NO NEED TO INTERPOLATE THE NEW YIELD RATE.
2.) FVTOCI/A.F.S. IS NOT APPLICABLE TO SME’S PFRS.
3.) PAS 36 RECOVERABLE AMOUNT IS NOT APPLICABLE, ONLY THE VALUE IN USE MAY BE USED FOR IMPAIRMENT
VALUATION PURPOSES OF INVESTMENT THAT USES AMORTIZED COST AS SUBSEQUENT MEASUREMENT.
4.) Use ORIG. yield rate for value in use of Investment @ amortized cost/HTM/Loans rec. BUT use CURRENT yield
rate for value in use of Available for sale.

INITIAL MEASUREMENT & GENERAL RULE SUBSEQUENT MEASUREMENT & EXCEPTION TO GENERAL RULE
SUBSEQUENT MEASUREMENT OF BONDS (lump sum bonds payment ISSUANCE NOT BETWEEN INTEREST DATE)

ILLUSTRATION: On January 1, 2016 Ms. Yang company issued to Cayaba industries corporation its 10% bonds payable in
the face amount of P6,000,000.00. The bonds mature on Dec. 31, 2025. The bonds were issued for P6,230,137.00,
resulting in bond premium of P230,137.00. Interest is payable semiannually every June 30 and December 31.

On the date of issuance, Yang Company incurred the following costs:

A.) Promotion cost P200,000.00

B.) Printing & engraving 68,332.00
C.) Legal fees 100,000.00
D.) Fees paid to independent accountants for registration 50,000.00
E.) Commissions paiFd to underwriter 500,000.00

On the date of acquisition, Cayaba industries corporation had in its voucher the following DIRECT transaction costs:

A.) Commission to broker of securities. 0.00

B.) Collection by regulatory agencies & commodity exchange. 0.00
C.) Transfer taxes and duties. 0.00

Origination fee on the date of acquisition were levied by cayaba industries corporation amounting to P918,332.27. This
amount collected is to be used to compensate for activities such as the following below:

A.) Evaluating the borrowers financial condition.

Norbin Burio. Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS
B.) Evaluating guarantee, collateral & other security.
C.) Negotiating the terms of the loan.
D.) Preparing & processing documents.
E.) Closing the loan transaction

The Yield rates at the date of debt security issuance are below:

1.) Yield rate BEFORE considering the bond issue cost:

a.) Present value of 1 for SEMIANNUAL period of 20 years at 4.7%= 0.3991
b.) Present value of ORDINARY annuity of 1 for SEMIANNUAL period of 20 years at 4.7% = 12.7854
2.) Yield rate AFTER considering the bond issue cost:
a.) Present value of 1 for SEMIANNUAL period of 20 years at 6%= 0.3118
b.) Present value of ORDINARY annuity of 1 for SEMIANNUAL period of 20 years at 6% = 11.4699

AMORTIZATION OF BONDS FOR DIFFERENT YIELD RATES GIVEN ARE AS FOLLOWS:

ADDITIONAL INFORMATION:

1.) On December 31, 2017 Ms. Young company believes that it can no longer to continue as a going concern. In
result the investment in debt security was impaired. It is identified at this date that only P3,000,000 out of
P6,000,000 face amount of bonds is recoverable at maturity date. The interest for year 2017 was paid prior to
indication of impairment. Below is the revised schedule of interest payment to be paid by the issuer:
December 31, 2018 = NONE
December 31, 2019 = P550,000
December 31, 2020 = 450,000
December 31, 2021 = 400,000
December 31, 2022 = 300,000
December 31, 2023 = 350,000
December 31, 2024 = 200,000
December 31, 2025 = 100,000
Also on this date the yield rate was identified to be at 11%

2.) Below are the available fair value less cost to sell for the investment in debt securities:
 At the end of 2016 calendar year the Fair value of investment in debt security is P5,216,000.00 NET of cost to
sell amounting to P100,000.00.
 At the end of 2017 calendar year the Fair value of investment in debt security is P4,000,000.00 NET of cost to
sell amounting to P100,000.00.
 At the end of 2018 calendar year the Fair value of investment in debt security is P7,500,000.00 NET of cost to
sell amounting to P500,000.00.
Norbin Burio. Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS
3.) On December 31, 2018 it is identified that cayaba industries corporation can now recover the whole face
amount of bonds at the maturity date. Also STARTING from this date the original schedule of interest payment is
to be continued by the issuer since the latter recovered from its supposed corporate dissolution. The yield rate
on this date is 12%

QUESTION:

1.) Prepare the journal entries for the calendar year ended 2016 in the books of holder using FVTPL/TRADING
SECURITIES under PFRS 9 or PAS 39 & issuer if issuer opt to account the bonds using amortized cost method.
2.) Prepare the journal entries for the calendar year ended 2016 in the books of holder using amortized cost/HTM
SECURITIES under PFRS 9 or PAS 39 & issuer if issuer opt to account the bonds using amortized cost method.
3.) Prepare the journal entries for the calendar year ended 2016 in the books of holder using Available for sale
underPAS 39 & issuer if issuer opt to account the bonds using amortized cost method.
4.) Prepare the journal entries for the calendar year ended 2016 in the books of holder using loans receivable under
PAS 39 & issuer if issuer opt to account the bonds using amortized cost method.
5.) Prepare the journal entries for the calendar year ended 2016 in the books of issuer if issuer opt to account the
bonds using Fair value method.KK
6.) How much is the balance of investment in debt security on the date of acquisition if Cayaba industries
corporation accounts the said debt security portfolio using FAIR VALUE METHOD under PAS 39 & PFRS 9.
7.) How much is the balance of investment in debt security on the date of acquisition if Cayaba industries
corporation accounts the said debt security portfolio using FAIR VALUE METHOD and IRREVOCABLY DESIGNATE
THE INVESTMENT THROUGH OTHER COMPREHENSIVE INCOME under PAS 39
8.) How much is the balance of investment in debt security on the date of acquisition if Cayaba industries
corporation accounts the said debt security portfolio using AMORTIZED COST METHOD under PAS 39 & PFRS 9.
9.) How much is the balance of investment in debt security on the date of acquisition if Cayaba industries
corporation accounts the said debt security portfolio using LOANS RECEIVABLE accounting under PAS 39.
10.)How much is the balance of investment in debt security at the end of 2016 if Cayaba industries corporation
accounts the said debt security portfolio using AMORTIZED COST METHOD under PAS 39 & PFRS 9.
11.)How much is the balance of investment in debt security at the end of 2016 if Cayaba industries corporation
accounts the said debt security portfolio using FAIR VALUE METHOD and IRREVOCABLY DESIGNATE THE
INVESTMENT THROUGH OTHER COMPREHENSIVE INCOME under PAS 39.
12.)How much is the balance of investment in debt security at the end of 2016 if Cayaba industries corporation
accounts the said debt security portfolio using FAIR VALUE METHOD under PAS 39 & PFRS 9.
13.)How much is the balance of investment in debt security at the end of 2016 if Cayaba industries corporation
accounts the said debt security portfolio using LOANS RECEIVABLE accounting under PAS 39.
14.)How much is the balance of investment in debt security at the end of 2017 if Cayaba industries corporation
accounts the said debt security portfolio using AMORTIZED COST METHOD under PAS 39 & PFRS 9.
15.)How much is the balance of investment in debt security at the end of 2017 if Cayaba industries corporation
accounts the said debt security portfolio using FAIR VALUE METHOD and IRREVOCABLY DESIGNATE THE
INVESTMENT THROUGH OTHER COMPREHENSIVE INCOME under PAS 39.
16.)How much is the balance of investment in debt security at the end of 2017 if Cayaba industries corporation
accounts the said debt security portfolio using FAIR VALUE METHOD under PAS 39 & PFRS 9.
17.)How much is the balance of investment in debt security at the end of 2017 if Cayaba industries corporation
accounts the said debt security portfolio using LOANS RECEIVABLE accounting under PAS 39.
18.)How much is the balance of investment in debt security at the end of 2018 if Cayaba industries corporation
accounts the said debt security portfolio using AMORTIZED COST METHOD under PAS 39 & PFRS 9.
19.)How much is the balance of investment in debt security at the end of 2018 if Cayaba industries corporation
accounts the said debt security portfolio using FAIR VALUE METHOD and IRREVOCABLY DESIGNATE THE
INVESTMENT THROUGH OTHER COMPREHENSIVE INCOME under PAS 39.
20.)How much is the balance of investment in debt security at the end of 2018 if Cayaba industries corporation
accounts the said debt security portfolio using FAIR VALUE METHOD under PAS 39 & PFRS 9.
21.)How much is the balance of investment in debt security at the end of 2018 if Cayaba industries corporation
accounts the said debt security portfolio using LOANS RECEIVABLE accounting under PAS 39.

INITIAL MEASUREMENT & GENERAL RULE SUBSEQUENT MEASUREMENT & EXCEPTION TO GENERAL RULE
SUBSEQUENT MEASUREMENT OF BONDS (LUMP SUM bonds payment ISSUANCE BETWEEN INTEREST DATES)

ILLUSTRATION: On August 1, 2016 Ms. Yang company issued to Cayaba industries corporation its 10% bonds payable in
the face amount of P6,000,000.00. The bond is dated January 1, 2016 and will mature on January 1, 2026. The bonds
were issued at an amount equal to its present value at the date of issue using the yield rate of the same date. Interest is
payable semiannually every June 30 & Dec 31. The yield rate on the date of issue is 8%.

ADDITIONAL INFORMATION:
1.) Below are the available fair value less cost to sell for the investment in debt securities:
Norbin Burio. Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS
 At the end of 2016 calendar year the Fair value of investment in debt security is P5,216,000.00 NET of cost to
sell amounting to P100,000.00.

REQUIREMENTS:
1.) Prepare the journal entries for year 2016 and 2017 in the books of holder and issuer if issuer opt to account the
its bonds using amortized cost method.

INITIAL MEASUREMENT & GENERAL RULE SUBSEQUENT MEASUREMENT & EXCEPTION TO GENERAL RULE
SUBSEQUENT MEASUREMENT OF BONDS (SERIAL bonds payment accounting year & bond year coincide)

ILLUSTRATION: On January 1, 2016 Ms. Yang company issued to Cayaba industries corporation its 10% bonds payable in
the face amount of P6,000,000.00. The bonds matures EVERY December 31, at P 600,000. The bonds were issued at an
amount equal to its present value at the date of issue using the yield rate of the same date. Interest is payable annually
every December 31. The yield rate on the date of issue is 8%
ADDITIONAL INFORMATION:
1.) Below are the available fair value less cost to sell for the investment in debt securities:
 At the end of 2016 calendar year the Fair value of investment in debt security is P5,216,000.00 NET of cost to
sell amounting to P100,000.00.

REQUIREMENTS:
1.) Prepare the journal entries for year 2016 and 2017 in the books of holder and issuer if issuer opt to account the
its bonds using amortized cost method.

INITIAL MEASUREMENT & GENERAL RULE SUBSEQUENT MEASUREMENT & EXCEPTION TO GENERAL RULE
SUBSEQUENT MEASUREMENT OF BONDS (SERIAL bonds payment accounting year & bond year DO NOT coincide)

ILLUSTRATION: On April 1, 2016 Ms. Yang company issued to Cayaba industries corporation its 10% bonds payable in the
face amount of P6,000,000.00. The bonds matures EVERY April, at P 600,000. The bonds were issued at an amount equal
to its present value at the date of issue using the yield rate of the same date. Interest is payable annually every April.
The yield rate on the date of issue is 8%

ADDITIONAL INFORMATION:
1.) Below are the available fair value less cost to sell for the investment in debt securities:
 At the end of 2016 calendar year the Fair value of investment in debt security is P5,216,000.00 NET of cost to
sell amounting to P100,000.00.

REQUIREMENTS:
1.) Prepare the journal entries for year 2016 and 2017 in the books of holder and issuer if issuer opt to account the
its bonds using amortized cost method.

RETIREMENT OF BONDS (LUMPSUM payment)

ILLUSTRATION: On August 1, 2016 Ms. Mary company issued to Cayaba industries corporation its 10% bonds payable in
the face amount of P6,000,000.00. The bond is dated January 1, 2016 and will mature on January 1, 2026. The bonds
were issued at an amount equal to its present value at the date of issue using the yield rate of the same date. Interest is
payable semiannually every June 30 & Dec 31. The yield rate on the date of issue is 8%.

ADDITIONAL INFORMATION:
1.) Below are the available fair value less cost to sell for the investment in debt securities:
 At the end of 2016 calendar year the Fair value of investment in debt security is P5,216,000.00 NET of cost to
sell amounting to P100,000.00.
2.) 50% of the bonds issued by Ms. Mary are retired on May 1, 2017 at 120% of the carrying amount of bonds
retired.

REQUIREMENTS:
1.) Prepare the journal entries for year 2016 and 2017 in the books of holder and issuer if issuer opt to account the
its bonds using amortized cost method.
Norbin Burio. Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS

RETIREMENT OF BONDS (SERIAL payment)

ILLUSTRATION: On January 1, 2016 Ms. Mary company issued to Cayaba industries corporation its 10% bonds payable in
the face amount of P6,000,000.00. The bonds mature EVERY December 31, at P 600,000. The bonds were issued at an
amount equal to its present value at the date of issue using the yield rate of the same date. Interest is payable annually
every December 31. The yield rate on the date of issue is 8%

ADDITIONAL INFORMATION:
1.) Below are the available fair value less cost to sell for the investment in debt securities:
 At the end of 2016 calendar year the Fair value of investment in debt security is P5,216,000.00 NET of cost to
sell amounting to P100,000.00.
2.) 50% of the bonds issued by Ms. Mary are retired on December 31, 2017 at 120% of the carrying amount of
bonds retired. These bonds are scheduled to mature on December 31, 2019
REQUIREMENTS:
1.) Prepare the journal entries for year 2016 and 2017 in the books of holder and issuer if issuer opt to account the
its bonds using amortized cost method.

NOTE: ACCOUNTING FOR TREASURY BONDS UNDER PFRS 9 IS THE SAME WITH ACCOUNTING FOR RETIREMENT OF
BONDS THE ONLY DIFFERENCE IS INSTEAD OF USING THE ACCOUNT BONDS PAYABLE WITH RESPECT TO ISSUER’S POINT
OF VIEW, USE “TREASURY BONDS” AS A DEBIT.

QUESTION: Eh sir edi meron paring bonds payable account under liability section kasi hindi ka nagdebit?

ANSWER: YES meron parin.

QUESTION: Eh sir akala ko ba parang retirement din?

ANSWER: YES kaya nga lang sa accounting for TREASURY BONDS ang bonds payable account ay hindi pa
nadederecognized because after REQCQUISITION of bonds by the issuer irere-ISSUE niya ito ulit.

QUESTION: Ha? Hindi ko maintindihan sir, Panong irereissue?

ANSWER: Actually ganito kasi yan.. Yung pag reacquire ng bonds pero hindi mo naman talaga niretire ang ibig sabihin
kasi niyan gusto lang ni issuer ng BAGONG bond indenture (DEBT SECURITY CONTRACT) somehow parang gusto lang
ipabago yung stipulations ng OLD bond indenture kaya may treasury bonds na naganap but actually hindi pa talaga
niretire ni issuer yung bonds… gusto niya lang talaga ng BAGONG stipulation like NEW NOMINAL RATE.

QUESTION: Eh sir anong journal entry para sa pag reissue ng treasury bonds kasi gawa na yung BAGONG bond indenture
indicating the new nominal rate, new maturity date and new issue price?

1.) IF NEW ISSUE PRICE > TREASURY BONDS:

DR. CASH (FACE AMOUNT OF OLD BONDS X ISSUE PRICE)
CR. TREASURY BONDS (FACE AMOUNT OF OLD BONDS)
CR. BOND’S PREMIUM (SQUEEZE/BALANCING)
2.) IF NEW ISSUANCE PRICE < TREASURY BONDS:
DR. CASH (FACE AMOUNT OF OLD BONDS X ISSUE PRICE)
DR. BOND’S DISCOUNT (SQUEEZE/BALANCING)
CR. TREASURY BONDS

QUESTION: Sir pareho lang ba yung TREASURY BONDS sa BOND REFUNDING transaction?

ANSWER: NO.

QUESTION: Ano pong difference?

ANSWER: Ang Treasury bonds = reacquisition and reissuance to SAME holder/investor, while yung BOND REFUNDING
retirement of bonds previously issued to holder/investor and issuance of NEW bonds to a DIFFERENT holder/investor.

QUESTION: Anong ginagawa sa bond refunding sir?

ANSWER: follow the steps below:

1.) Retire the OLD BONDS

2.) Issue a NEW BONDS
Norbin Burio. Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS

WARRANTS, CONVERSION PRIVILEDGE, STOCK RIGHT:

POINT OF VIEW: HOLDER

BASIS: PFRS 9 AND IFRIC 9

GENERAL RULE: BIFURCATE the embedded derivative from its host.
EXCEPTION: DO NOT BIFURCATE if the host contract is WITHIN the scope of PFRS 9 and being measured initially and
subsequently at FAIR VALUE with changes designated through P/L (EX: FVTPL &TRADING SEC.) Note that the COST in
initial measurement is also called FAIR VALUE.
According to PFRS 13 the Fair value on initial measurement is the amount AGREED by the parties in an arm’s length
transaction to pay or received. It may also be based on the independent professional appraiser “REPLACEMENT COST” or
Active market “SOUND VALUE”.

INITIAL AND SUBSEQUENT MEASUREMENT OF EMBEDDED DERIVATIVES: FAIR VALUE WITH ANY CHANGES RECOGNIZED
TO P/L. PRESENTATION: CURRENT ASSET.

GENERAL RULE: IF PROBLEM IS SILENT AS TO THE ACCOUNTING METHOD USED TO ACCOUNT THE HOST CONTRACT DO
NOT BIFURCATE THE EMBEDDED DERIVATIVES FROM ITS HOST.
EXCEPTION: IF THE CONTRARY EXIST.

POINT OF VIEW: ISSUER

ABSOLUTE RULE: Always bifurcate the equity and debt security the entry is called COMPOUND INSTRUMENT.

ILLUSTRATION # 1: On December 31, 2016, Mr. Jerome company issued 5,000 of its 8% 10-year, P1,000 face value bonds
with detachable share warrants at 110 to Mr. Cayaba company. Each bond carried a detachable warrant for ten ordinary
shares of Mr. Jerome company at a specified option price of P25 per share. The par value of the ordinary share is P20.

Immediately after issuance, the market value of the bonds without the warrants was P5,400,000 and the market value of
the warrants was P600,000. The warrants are said to be expired on December 31, 2017

On December 31 2017 Mr. Cayaba exercise 50% of the warrants

The warrants have a fair value of P150,000 at the end of 2017 calendar year. Further Mr. Cayaba company opt to use the
FAIR VALUE OPTION in recognizing its investment in debt security from Mr. Jerome company.

REQUIREMENTS: EXHIBIT THE difference of BIFURCATED embedded derivatives and NOT BIFURCATED embedded
derivatives by satisfying the following below:

1.) Prepare the journal entries in the books of holder and issuer.
2.) What is the journal entry on December 31, 2017 assuming that the warrants are not exercised but sold to other
party. (Assumed that the sale proceed is P300,000.)

ILLUSTRATION # 2: Ms. Milky company issued 5,000 convertible bonds to Mr. cayaba company on January 1, 2016. The
bonds have a 3 year term and are issued at 110 with a face value of P1,000 per bond. Interest is payable annually in
arrears at a nominal 6% interest rate. Each bond is convertible at anytime up to maturity into 100 ordinary shares with
Par value of P5. When the bonds are issued, the prevailing market interest rate for similar debt instrument without
conversion option is 9%.

On December 31, 2016 Mr cayaba exercised 50% of its conversion privileged. Also on this date the conversion privileged
has a fair value amounting to P900,000

REQUIREMENTS: EXHIBIT THE difference of BIFURCATED embedded derivatives and NOT BIFURCATED embedded
derivatives by satisfying the following below:

1.) Prepare the journal entries in the books of holder and issuer.
2.) What is the journal entry on December 31, 2017 assuming that the conversion privileged are not exercised but
sold to other party. (Assumed that the sale proceed is P1,000,000.)
Norbin Burio. Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS
EXCEPTION TO EXCEPTION: SUBSEQUENT MEASUREMENT: “IF THERE IS A RECLASSIFICATION.”

USEFUL TIPS: IF THE SALE IS RECURRING AND CAN BE CONTROLLED BY THE HOLDER OF BONDS AND THE % OF
SOLD BONDS OVER THE TOTAL BONDS ACQUIRED IS MORE THAN AN INSIGNIFICANT AMOUNT TAINTING
UNDER PAS 39 SHOULD BE APPLIED BY THE HOLDER. AFTER 2 YEARS FROM TAINTING DATE THE HOLDER MAY
RECLASSIFY THE INVESTMENT FROM AVAILABLE FOR SALE CLASSIFICATION BACK TO HELD TO MATURITY
CLASSIFICATION “CLEANSING”.

EMPHASIS: TAINTING & CLEASING under PAS 39 is NOT anymore applicable under PFRS 9.

COMMON SENSE: The piecemeal recycling of OCI formula under CLEANSING SCENARIO above ay ganito lamang,
kapag ginamit mo yung formula makukuha mo yearly yung OCI ending balance.. Kung makukuha mo yung OCI
ending balance ng for example year 2016 tapos makuha mo rin yung OCI ending balance using the same formula
ng year 2017 iminus mo lang makukuha mo na yung RECYCLED OCI through P/L ng year 2017. In short tignan mo
ito:
FOR CALENDAR YEAR ENDING 2016 FOR CALENDAR YEAR ENDING 2017
OCI BEG. BALANCE: P0 OCI BEG. BALANCE (SAME NUNG OCI END OF 2016)
LESS: RECYCLED OCI 0 LESS: RECYCLED OCI
OCI END. BALANCE (MAKUKUHA MO ITO SA FORMULA)OCI END. BALANCE (MAKUKUHA MO ITO SA FORMULA)
Norbin Burio. Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS
ILLUSTRATION OF PAS 39 “TAINTING” (reclassification from held to maturity to available for sale)
On January 1, 2016, Mr. Roden company purchased P1,000,000 10% bonds designated as held to maturity. The bonds
were purchased to yield 12%. Interest is payable annually every December 31. The bonds mature on December 31, 2020.
On December 31, 2016 the bonds were selling at 99. On December 31, 2017 Mr. Roden sold P500,000 face value bonds
at 101. The bonds were selling at 103 on December 31, 2018.
REQUIREMENTS:
1.) How much is the purchase price of the bonds on January 1, 2016?
a.) P927,880
b.) P946,480
c.) P1,075,796
d.) P939,230
2.) The carrying amount of the investment in bonds on December 31, 2016 is?
a.) P1,063,376
b.) P951,938
c.) P960,058
d.) P939,226
3.) How much is the realized gain on sale of the investment in bonds in 2017?
a.) P41,060
b.) P29,034
c.) P35,387
d.) P10,000
4.) How much is the net unrealized gain in accumulated other comprehensive income in shareholders’ equity
section as of December 31, 2017?
a.) P39,034
b.) P29,033
c.) P31,917
d.) 0
5.) How much is the net unrealized gain in accumulated other comprehensive income in shareholders equity
section as of December 31, 2018?
a.) P39,034
b.) P29,034
c.) P31,917
d.) 0
ANSWERS: 1.) A, 2.) D, 3.) B, 4.) B, 5.) C

ILLUSTRATION OF PAS 39 “CLEANSING” (reclassification from available for sale to held to maturity investment)
On January 1, 2016, Ms. Mary company purchased P4,000,000 10% bonds for P3,711,520 and designated as available
for sale. The bonds were purchased to yield 12%. Interest is payable annually every December 31. The bonds mature on
December 31, 2020. The bonds were selling at 99 and 98 on December 31, 2016 and 2017 respectively. Because of the
change in intention and ability, Ms. Mary reclassified the investment to held to maturity on December 31,2018. On the
date of reclassification, the prevailing market interest rate is 9%.
REQUIREMENTS:
1.) How much is the net unrealized gain in accumulated other comprehensive income in shareholder’s equity
section as of December 31, 2017?
a.) P 112,270
b.) P 208, 500
c.) P 90,800
d.) P 40,000
2.) How much is the net unrealized gain in accumulated other comprehensive income in equity as of December 31,
2018?
a.) P 205,780
b.) P358,900
c.) P 93,500
d.) 0
3.) How much should be recognized in 2019 profit or loss related to this investment in bonds?
a.) P366,300
b.) P 396,400
c.) P 463,800
d.) P 400,000
4.) How much is the net unrealized gain in accumulated other comprehensive income in shareholder’s equity
section as of December 31, 2019?
a.) 0
Norbin Burio. Cayabyab, CPA Contact # 0926-538-1070 PLMar Instructor BONDS
b.) P 175,700
c.) P 172,100
d.) P 108,400
5.) How much is the carrying amount of the investment in bonds on December 31, 2019?
a.) P4,036,800
b.) P3,928,400
c.) P4,006,700
d.) P4,104,100
ANSWERS: 1.) A, 2.) A, 3.) C, 4.) D, 5.) A.
REMINDERS:
1.) Use pv factor of 1 for the following scenarios:
a.) LUMP SUM PRINCIPAL PAYMENT.
b.)SERIAL principal payment and the AMOUNT of payments are different.
c.) SERIAL principal payment and the DATES of payments are different.
2.) Use pv factor of ordinary/advance annuity of 1 for SERIAL PAYMENT and the
amount as well as the dates are THE SAME.
“Almost sumuko na ako… hindi ko na kaya.. pero nanalig ako sa Panginoon, nagdasal ako.. at isinuko ang lahat
sa kanya, kinalimutan ko ang LAHAT ng nasa paligid ko at libro nalang ang itinira ko pang-ubos ng aking oras..
almost maospital na ako pero nagdasal pa rin ako.. LUMABAN ako kahit DUGUAN na halos ang Sistema ng
buong katawan ko.. pagod na ako SOBRA, pero LUMABAN parin ako.. isang araw I prayed and said “Lord
Pakiramdam ko wala na akong rason para mabuhay.. I am NO ONE, I am NOTHING, please… DEFINE ME.” I
opened my eyes at kasabay nito ang pagbuklat ko sa aking Bibliya.. ito ang nakita ko “

So kapatid…

IKAW NAMAN! GOoD luck ;)