ASSIGNMENT 22-10, 23-5, 26-8,29-9

22-9

Jan 1, 2017

Investment in Bonds 3,649,600

Cash 3,649,600

December 31, 2017

Cash 320,000

Interest Income 320,000

Annual interest

Investment in bonds 44,960

Interest Income 44,960

Interest Income (10% 3,649,600) 364,960

Interest Received 320,000

Amortization 44,960

(to get the amortization when only the effective rate is given, multiply the effective rate to the purchase
price then minus the interest received)

Dec. 31, 2018

Cash 320,000

Interest Income 320,000

Investment in Bonds

Interest Income

Interest Income (3,649,600+44,960 x 10%) 369,456

Interest Received 320,000

Amortization 49,456

Jan 1, 2019

Market Value 4,200,000

Carrying amount 3,744,016

Gain from reclassification of financial asset 455,984

Investment in Bonds 455,984

Gain on reclassification of financial asset 455,984

Financial asset-FVPL 4,200,000

Investment in Bonds 4,200,000

23-5

1. Investment in ANA ordinary shares 300,000

Cash 300,000

2. Investment Benguet Ordinary shares 120,000

Dividend Income 120,000

3. Investment in ANA ordinary shares 420,000

Cash 420,000

4. Cash(200x5000 x 12% /2) 60,000

Dividend Income 60,000

5. Received 20,000 new ANA ordinary shares as a result of a 2-for-1 split of 10,000 original shares
held.
 6. 20,000 720,000

720,000/20,000 = 36

Cost 36 x 8,000= 288,000

Sale Price 85 x 8000= 680,000
Transaction costs 680,000 x 5%= 34,000

Cash (680,000-34,000) 646,000

Investment in ANA Ordinary Shares 288,000
Gain on sale of investment 358,000

Shares Cost
SMC Preference share 5,000 1,200,000
Benguet Ordinary Shares 10,000 1,000,000
Benguet Ordinary Shares 2,000 120,000
ANA Ordinary shares 12,000 432,000

26-8

Face amount of bonds 1,000,000

Acquisition cost on Jan. 1, 2017 1,150,000
Premium on the bonds 150,000
Annual instalment Dec. 31 200,000
Interest payable semiannually 12%

Year Bond Outstanding Fraction Premium

Amortization
2017 1,000,000 10/30 50,000
2018 800,000 8/30 40,000
2019 600,000 6/30 30,000
2020 400,000 4/30 20,000
2021 200,000 2/30 10,000
3,000,000 150,000

Jan. 1 2017

Investment in Bonds 1,150,000

Cash 1,150,000
June 30, 2017

Cash (1,000,0000 x 12% x 6/12) 60,000

Interest Income 60,000

December 31, 2017

Cash 60,000

Interest Income 60,000

Interest Income 50,000

Investment in Bonds 50,000

Cash 200,000

Investment in Bonds 200,000