On January 1, 2017, Montercy Company issues 100 million unsecured bonds at an issue price 95 cents per unit. Transaction costs, that include underwiting fee. amount to P500,000. The bond pay interest of 4% at the end of the first year and thereafter interest paymer increases at 1%ó per year. The bond mature on December 31, 2021 are redeemable at the nominal value of PI cach. At the date of issue, Monterey Company has a credit rating of "ABB" and its market interest rate is 7.09a. But due to the imputation of the transaction cost, the effective rate of the debt is 7.21%.• What is the amort:zed cost of the deht as of December 31, 2019? a. P97.313,462 C. P100,491,439 d. P100,736,871 b. P99,329,763 3715
On January 1, 2017, Montercy Company issues 100 million unsecured bonds at an issue price 95 cents per unit. Transaction costs, that include underwiting fee. amount to P500,000. The bond pay interest of 4% at the end of the first year and thereafter interest paymer increases at 1%ó per year. The bond mature on December 31, 2021 are redeemable at the nominal value of PI cach. At the date of issue, Monterey Company has a credit rating of "ABB" and its market interest rate is 7.09a. But due to the imputation of the transaction cost, the effective rate of the debt is 7.21%.• What is the amort:zed cost of the deht as of December 31, 2019? a. P97.313,462 C. P100,491,439 d. P100,736,871 b. P99,329,763 3715
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1RE
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On January 1, 2020, Monterey Company issues 100 million unsecured bonds at an issue price 95 cents per unit. Transaction costs, that include underwriting fee, amount to P500,000. The bonds pay interest of 4% at the end of the first year and thereafter interest payment increases at 1% per year. The bond mature on December 31, 2024 are redeemable at the nominal value of P1 each. At the date of issue, Monterey Company has a credit rating of “ABB” and its market interest rate is 7.09%. But due to the imputation of the transaction cost the effective rate of the debt is 7.21%. What is the amortized cost of the debt as of December 31, 2022?
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