THINGS TO REMEMBER:

INITIAL RECOGNITION

- At what amount should this acquisition of bonds be recorded?

TREATMENT IN DIRECT ATTRIBUTABLE TRANSACTION COSTS:

- FAIR VALUE AT AMORTIZED COST (FAIR VALUE + DIRECT ATTRIBUTABLE COST)

- FAIR VALUE AT OTHER COMPRHENSIVE INCOME (FAIR VALUE + DIRECT ATTRIBUTABLE COST)
- FAIR VALUE AT PROFIT AND LOSS (IGNORED, CONSIDERED AS EXPENSE)

SUBSEQUENT RECOGNITION

FAIR VALUE AT AMORTISED COST

- KAPAG WALA SINABI NR OR ER, USE PRT

- PRT + ACQUSITION COST (FAIR VALUE + DATC)

FAIR VALUE AT OTHER COMPREHENSIVE INCOME

- How much is the interest income? interest income = Effective interest (income)
- CARRYING AMOUNT x EFFECTIVE INTEREST

- How much is the unrealized gain from change in fair value to be reported in the other
comprehensive income? Measured at fair value after amortization for the effective
interest
- Note that both amortization is applied under the effective interest method before
applying the FV measurement requirement for the FVOCI classification
- KUNG MAY QUOTED AYON COMPARE MO YON CARRYING AMOUNT NA SAME DATE
- EXAMPLE: Fair value at December 31, 2020 is 120% of 5,000,000 = 6,000,000 compare to
**5,318,000 (carrying amount of the bonds at 12/31/2020) = 682,000

- Ester Company purchased Php5,000,000 of bonds at par. The entity has classified this
investment at fair value through other comprehensive income. At the end of the year,
the entity's annual effective interest income is Php200,000 and the fair value of the bonds
was Php4,700,000. What gain or loss should be recognized in other comprehensive?
 - KAPAG FAIR VALUE AT OCI, IGNORE MO YUNG INTEREST INCOME KASI DIBA SA INCOME
STATEMENT YAN NIRERECORD,
- COMPARE MO LANG FAIR VALUE, KUNG MAY DIRECT ATTRIBUTABLE ADD MO

- Interest income of Php200,000 will be reported in income statement.

- Only the difference in fair value will be reported in other comprehensive income which
is 300,000 loss (4,700,000 vs 5,000,000)

FAIR VALUE AT OTHER COMPREHENSIVE INCOME

- How much is the interest income in 2020?
- interest income = Nominal interest (income)
- FACE AMOUNT x NOMINAL RATE
- How much is the total income should be reported for 2020?
- Interest income = 400,000
- Change in fair value gain = 200,000 (5,600,000 vs 5,400,000)
- 400,000 income plus 200,000 gain = 600,000
- SO KAPAG TINATANONG TOTAL INCOME TAPOS FVPL TIGNAN /COMPARE MO MUNA
YUNG FAIR VALUE THEN ADD MO YUNG INTEREST INCOME

NOTE

- ANG INTEREST INCOME RERECORD MO LAGI SIYA SA INCOME STATEMENT (EITHER CA

X ER KAPG FVOCI O KAYA FA X NR KAPAG FVPL
- THE UNREALIZED GAIN OR LOSS IS RECORDED IN INCOME STATEMENT KAPAG
CLASSIFIED AS FAIR VALUE THROUGH PROFIT OR LOSS
- AND JAN DEN RERECORD INTEREST INCOME
- THE UNREALIZED GAIN OR LOSS IS RECORDED IN OTHER COMPREHENSIVE INCOME KAPAG
CLASSIFIED AS FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
- MAGRERECORD LANG NG CUMULATIVE GAIN OR LOSS SA STATEMENT IN CHANGES OF
EQUITY KUNG YUNG FINANCIAL ASSETS IS CLASSIFIED AS FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME
- CUMULATIVE – PINAGSAMANG SAMANG LOSS OR GAIN SINCE THE ACQUISITION OF THE
ASSETS
- KAPAG REALIZED GAIN NA SIYA, KAHIT FAIR VALUE THROUGH OCI SIYA, PAPASOK SIYA
INCOME STATEMENT, HINDI SA OCI, KUNDI SA INCOME STATEMENT, KASI REALIZED NA,
NABENTA MO NA E
- BASTA KAPAG NABENTA NA YUNG STATEMENT OF CHANGES IN EQUITY, ZERO
PRESENT VALUE FACTOR
NOTE:
- WAG MO KAKALIMOTAN I= ANNUAL RATE/ FREQUENCY OF INTEREST
- WAG MO RIN KALIMOTAN CONVERT YUNG N
- ANNUALY (1) 12 MONTHS
- SEMI ANNUALY (2) 6 MONTHS
- QUARTERLY (4). 3 MONTHS
- MONTHLY (12) 1 MONTH
- KAPAG FUTURE VALUE OF SINGLE PAYMENT HINAHANAP, HINDI NA
 - PV OF 1 + PV OF ANNUITY + DIRECT ATTRBITABLE COST (IF FVAC, FVOCI)
- EFFECTIVE RATE GAMIT SA PV OF 1
- FACE AMOUNT X NOMINAL RATE
- TAS ANNUITY ER ULI

Date Interest Interest Income Amortization Carrying Amount

Receivable Discount
IR= FA x NR II = CA x ER A = IR - II CA + A
Date Interest Interest Income Amortization Carrying Amount
Receivable Premium
IR= FA x NR II = CA x ER A = IR - II CA - A

SHORTCUT:

- FACE AMOUNT + INTEREST RECEIVABLE (FA X NR) DIVIDED BY (1+ER)

DISCOUNTING ON NOTES RECEIVABLE

NON INTEREST BEARING NOTE PROBLEM