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Financial Asset Debt Securities Practice Quiz

This document contains a practice quiz on financial asset debt securities. It consists of 5 problems testing the concepts of purchase price, interest income, realized and unrealized gains and losses, and reclassification of financial assets. The problems require calculating amounts based on given bond acquisition dates, face values, interest rates, yields and sale prices.

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Marjorie Palma
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4K views

Financial Asset Debt Securities Practice Quiz

This document contains a practice quiz on financial asset debt securities. It consists of 5 problems testing the concepts of purchase price, interest income, realized and unrealized gains and losses, and reclassification of financial assets. The problems require calculating amounts based on given bond acquisition dates, face values, interest rates, yields and sale prices.

Uploaded by

Marjorie Palma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FINANCIAL ASSET: DEBT SECURITIES PRACTICE QUIZ

PROBLEM 1
On January 1, 2018, Bokod Co. acquired a 4-year bond with a face value of P1,200,000 and
stated interest of 10% per year payable annually on December 31. The bonds were acquired to yield 12%.
The bonds are to be appropriately classified as a financial asset at amortized cost. (Round off present
value factors to four decimal places).
1. How much is the purchase price of the bonds on January 1, 2018?
P277,076
P1,127,076
P1,051,730
Nil
2. How much is the interest income for 2018?
P120,000
P114,104
P139,128
P135,249
PROBLEM 2
On April 1, 2018, Buguias Co. acquired 4-year bonds with a face value of P2,000,000 and stated
interest of 10% per year payable annually on December 31. The bonds were acquired to yield 12%. The
bonds are to be appropriately classified as a financial asset at amortized cost. (Round off present value
factors to four decimal places).
3. How much is the initial carrying amount of the bonds on April 1, 2018?
P1,884,814
P1934,814
P1,834,814
P1,878,460
4. How much is the purchase price of bonds on April 1, 2018?
P1,878,460
P1,884,814
P1,834,814
P1,934,814
PROBLEM 3
On January 1, 2018, Kabayan Co. acquired 4-year bonds with a face value of P1,800,000 and stated
interest of 10% per year. The bonds mature in 4 equal annual installments every December 31. The
interest is also payable every December 31. The bonds were acquired to yield 12%. The bonds are to be
appropriately classified as a financial asset at amortized cost.
5. How much is the purchase price of bonds on January 1, 2018?
P612,167
Nil
P1,030,521
P1,727,834
6. How much is the interest income for 2018?
P207,340
Nil
P188,052
P156,621
7. How much is the interest income for 2019?
Nil
P156,621
P207,340
P188,052
PROBLEM 4
On January 1, 2017, Virginia Co. acquired 5-year bonds with a total face value of P5,000,000 for
P5,379,079. The bonds carry an interest of 12% per year payable every December 31. The bonds are to be
appropriately classified as held for trading. On December 31, 2017, the bonds are quoted at 104%.
On January 3, 2018, the 1/2 of the bonds were sold at 105.
On November 1, 2018, Virginia Co. changed its business model. It was determined that the
remaining investment in bonds should be reclassified to financial asset measured at amortized cost on the
reclassification date. On December 31, 2018, the bonds are quoted at 102.
8. How much is the interest income for 2017?
P645,489
P600,000
Nil
P537,908
9. How much is the unrealized gain (loss) in 2017 to be recognized in the profit or loss?
P(179,079)
P(379,079)
Nil
P200,000
10. How much is the realized gain (loss) on sale in 2018 to be recognized in the profit or loss?
P(33,494)
P(64,540)
P25,000
Nil
11. How much is the interest income in 2018?
P300,000
P600,000
P265,849
P531,699
12. How much is the gain (loss) on reclassification to be recognized in the profit or loss on January
1, 2019?
Nil
P50,000
P100,000
P24,343
PROBLEM 5
On January 1, 2017, Robelyn Co. acquired 5-year bonds with a total face value of P5,000,000 and
stated interest of 12% per year payable annually on December 31. The bonds were acquired to yield 10%.
The bonds are to be appropriately classified as financial asset measured at fair value through other
comprehensive income. On December 31, 2017, the fair value of the is at 104%,
On January 3, 2018, the 1/2 of the bonds were sold at 105.
13. How much is the interest income for 2017?
Nil
P537,908
P600,000
P645,489
14. How much is the realized gain (loss) on sale in 2018 to be recognized in the profit or loss?
Nil
P(33,494)
P(64,540)
P25,000
15. How much is the unrealized gain (loss) in 2017 to be recognized in the profit or loss?
P(116,987)
Nil
200,000
P116,987

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