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Bsa 21
Bsa 21
1. The initial classification of investments in financial assets is generally based on: The entity’s
business model and contractual cash flow characteristics of the financial asset
i. At the beginning of the year, a company had a debit balance in the account FV
Adjustment—Debt Investments. During the year, the company did not buy or sell any
debt securities, but at the end of the year, the related fair value adjustment account had a
credit balance. This change indicates that: The value of the investment account
decreased
2. In accounting for investments in debt securities that are designated at fair value through profit or
loss: Any discount or premium is not amortized
3. Bonds are purchased on June 1 that have interest receipt dates of April 1 and October 1. Bond
interest revenue for the year ended December 31, is for a period of: Seven months
4. When bonds are purchased at a discount and are classified as debt investments at amortized
cost, at each interest receipt date, the interest revenue: Increases
I. Problem Solving
1. Pennsylvania has life insurance policies on its officers' lives. Annual premiums amount to P5,000.
At the end of 2019, cash surrender value of the policies totaled P18,200. Dividends received by
Pennsylvania from the insurance company amounted to P500 in 2019. The insurance expense
recognized by Pennsylvania in 2019 was P3,500.
Required: Compute the amount of cash surrender value of these policies on January 1, 2019.
Answer: 17,200