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Chapter 9Investments1 to PFRS 9, a financial instrument is recognized a the instrument has probable economic benefits that can be measured reliably. b when the entity becomes a party to the contractual provisions of the instrument. c the entity enters into a binding contract to deliver a variable nu...

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Chapter 9 Investments 1. Ac c or di ngt oPFRS9,afinanc i ali ns t r ume nti sr e c ogni ze d a . whe nt hei ns t r ume ntha spr obabl ee c onomi cbe ne fit st ha tc anbeme as ur e dr e l i a bl y . b. onl ywhe nt hee nt i t ybe c ome sapar t yt ot hec ont r ac t ua lpr ovi s i onsoft hei ns t r ume nt . c . whe nt hee nt i t ye nt e r si nt oabi ndi ngc ont r ac tt ode l i ve ravar i a bl enumbe rofi t sowne qui t y i ns t r ume nt . d. onl ywhe nt hei ns t r ume ntr e qui r e sr e c e i ptofanot he rfinanc i ali ns t r ume ntunde rc ondi t i onst ha t ar epot e nt i a l l yf a vor abl e . 2. Whi c hoft hef ol l owi ngi safinanc i a ll i a bi l i t y? a .I nc omet axpa yabl e b. Une ar ne dr e ve nue c . War r ant yobl i ga t i on d. Le as el i a bi l i t y 3. Dur i ngt hepe r i od,ane nt i t yac qui r e sani nve s t me nt .Thee nt i t yhasa“hol dt oc ol l e c tands e l l ” bus i ne s smode l . Thei nve s t me nts houl dbec l as s i fie das a .i nve s t me ntme a s ur e da tf ai rval uet hr oughot he rc ompr e he ns i vei nc ome . b. i nve s t me ntme a s ur e da tamor t i ze dc os t . c .i nve s t me ntme a s ur e da tf ai rval uet hr oughpr ofitorl os s . d. anyoft he s e 4. Whi c hoft hef ol l owi ngi sme as ur e da tf ai rval uewi t hf ai rval uec ha nge sr e c ogni z e di npr ofitorl os s ? a . He l dt oma t ur i t yi nve s t me nt s b. Fi nanc i alas s e t sde s i gna t e da tFVPL c . FVOCI d. Al loft he s e 5. I fane nt i t y’ sbus i ne s smode l ’ sobj e c t i vei st ohol di nve s t me nt si nor de rt oc ol l e c tc ont r ac t ualc as h flowst ha ta r es ol e l ypa yme nt sf orpr i nc i palandi nt e r e s t s , t he ni nve s t me nt ss houl dbec l as s i fie das a .s ubs e que nt l yme as ur e da tf ai rval uet hr oughot he rc ompr e he ns i vei nc ome . b. s ubs e que nt l yme as ur e da tamor t i ze dc os t . c .s ubs e que nt l yme as ur e da tf ai rval uet hr oughpr ofitorl os s . d. anyoft he s e 6. Unde rPFRS9, fina nc i a las s e t sar ec l as s i fie d a . ont hebas i soft hee nt i t y’ sbus i ne s smode lonl y . b. bas e dont hena t ur eoft hefina nc i a las s e t s , i . e . , de btore qui t yi ns t r ume nt . c . asfinanc i a las s e t ss ubs e que nt l yme as ur e da tFVPL,FVOCI( e l e c t i on) ,FVOCI( manda t or y)or Amor t i ze dc os t . d. al loft he s e 7. Ac c or di ngt oPFRS9,i fanas s e toral i abi l i t yme as ur e da tf ai rval ueha sabi dpr i c eandanas kpr i c e , t hepr i c ewi t hi nt hebi das ks pr e a dt ha ti smos tr e pr e s e nt a t i veoff a i rval uei nt hec i r c ums t anc e si s us e dt ome a s ur ef ai rval ue .Bi dpr i c ei s a .t hemaxi mum pr i c ea twhi c hmar ketpar t i c i pa nt sar ewi l l i ngt os e l lanas s e t . b. t hemaxi mum pr i c ea twhi c hmar ketpar t i c i pa nt sar ewi l l i ngt obuyanas s e t . c .t hemi ni mum pr i c ea twhi c hmar ke tpar t i c i pant sar ewi l l i ngt os e l lanas s e t . d. t hepr i c et ha tane nt i t ywi l li nc urt obi df ar e we l lt oa nas s e t .

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8. Thef ol l o wi ngar et ake nf r om t her e c or dsofLunc hCo. asofye ar e nd. nve s t me nti ns ubs i di ar y 4 Ca s h 1 0, 4 00 I 4, 0 00 Ac c ount sr e c e i vabl e 1 2, 0 00 Tr e as ur ys har e s 4 4, 8 00 Al l owanc ef orba dde bt s ( 1, 6 0 0) I nve s t me nti nbonds 9 , 6 00 Not er e c e i vabl e 4 , 0 00 La nd 1 12, 0 0 0 I nt e r e s tr e c e i vabl e 1 , 6 00 Bui l di ng 2 08, 0 0 0 Cl ai mf ort a xr e f und 9 , 6 00 Ac c um. de pr e c i a t i on ( 52 , 0 00) Advanc e st os uppl i e r s 4, 8 0 0 I nve s t me ntpr ope r t y 40 , 0 00 I nve nt or y 6 0, 0 00 Bi ol ogi c a la s s e t s 24 , 0 00 Pr e pai de xpe ns e s 4 , 0 00 I nt angi bl ea s s e t s 5 6, 0 00 Pe t t yc as hf und 8 00 De f e r r e dt axa s s e t s 4 8 , 0 00 I nve s t me nti ne qui t y Ca s hs ur r e nde rval ue 9 , 6 00 s e c ur i t i e s 1 0, 4 00 I nve s t me nti na s s oc i a t e 1 6, 0 00 Si nki ngf und 1 6, 0 00 How muc har et het ot alfina nc i alas s e t sdi s c l os e di nt henot e s ? a . 142, 400 b. 132, 000 c . 132, 800 d. 92, 800 Us et hef o l l o wi ngi nf o r ma t i o nf o rt hene xtt hr e eq ue s t i o ns : OnJ anua r y1,20x1 ,ABC Co.pur c ha s e d1, 00 0s har e sofXYZ,I nc .f or₱250, 000.Commi s s i onpai dt o br oke ra mount e dt o₱10, 000.Thee qui t ys e c ur i t i e swe r ede s i gna t e dbymana ge me ntt obeme as ur e da t f ai rval uet hr oughpr ofitorl os s .OnDe c e mbe r3 1,2 0x1,t hes ha r e sa r equot e da t₱200pe rs har e .I twas e s t i ma t e dt ha tt r ans ac t i onc os tof₱20pe rs ha r ewi l lbei nc ur r e di ft hes har e swe r es ol dont ha tda t e . 9. How muc hi st heunr e al i z e dgai n( l os s )onc ha ngei nf a i rval uer e c ogni z e di nt he20x1pr ofitorl os s ? a . ( 70, 000) b. ( 50, 000) c . ( 40, 0 00) d. 60, 00 0 10.On J anuar y3,20x2,al lt hes ha r e swe r es ol da t₱300pe rs ha r e .Commi s s i on pa i df ort hes al e amount e dt o₱60, 000. How muc hi st her e al i z e dgai n( l os s )f r om t hes al e ? a . 60, 000 b. ( 10, 000) c . 40, 0 00d. ( 40, 00 0) 11.I fABCCo.us e sanal l owanc eac c ountt oac c ountf orc hange si nf a i rval ue s ,how muc hi st hebal a nc e oft hi sac c ountonDe c e mbe r31, 20x1? a . 70, 000de bi t c . 40, 0 00c r e di t b. 50, 000de bi t d. 50, 000c r e di t Us et hef o l l o wi ngi nf o r ma t i o nf o rt hene xtt hr e eq ue s t i o ns : OnJ an.1 ,20x1,Thr e eCo.pur c has e d1 0, 000s har e sofAM,I nc .f or₱1, 000, 000.Thr e eCo.pai dbr oke r ’ s c ommi s s i on of₱15, 000on t heac qui s i t i on.Thr e eCo.madean i r r e voc abl ec hoi c et os ubs e que nt l y me a s ur et hes ha r e sa tf a i rval uet hr oughot he rc ompr e he ns i vei nc ome .Thequot e dpr i c e spe rs ha r eon De c .3 1,2 0x1a ndDe c .31,20 x2we r e₱9 0and₱1 08,r e s pe c t i ve l y .OnJ an.3 ,2 0x3,Thr e eCo.s ol dal lt he s ha r e sa t₱105pe rs har e . Thr e eCo. pai dbr oke r ’ sc ommi s s i onof₱16, 000ont hes al e . 12.How muc hi st heunr e al i z e dgai n( l os s )r e c ogni ze di nThr e eCo. ’ s2 0x1pr ofitorl os s ? a . 115, 000 b. ( 115, 000) c .( 85, 000) d. 0 13.How muc hi st heunr e a l i ze d gai n( l os s )r ec ogni z e di n Thr e eCo. ’ s20x2 ot he rc ompr e he ns i ve i nc ome ? a . 18 0, 000 b. 65, 000c . ( 115, 000) d. 0 14.How muc hi st hec umul a t i vegai n( l os s )t r ans f e r r e dt or e t ai ne de ar ni ngsonJ an. 3, 20x3? a . 19, 000 b. 34, 000c . ( 19, 000) d. ( 34, 000)

Page|3 15.OnJ anua r y1,20x1,ABCCo.pur c ha s e d₱1, 00 0, 000bondsa tapr i c et ha tr e fle c t sayi e l dr a t eof14%. Thebondsma t ur eonJ anuar y1,2 0x4a ndpa y12% a nnuali nt e r e s t .Thebondsa r ec l as s i fie dashe l d f ort r adi ngs e c ur i t i e s .OnDe c e mber31,2 0x1, t hebondsar es e l l i nga tayi e l dr a t eof10%.How muc h i st heunr e a l i ze dgai n( l os s )ont hec ha ngei nf ai rval uer e c ogni z e di nABC’ s20x1pr ofitorl os s ? a . 78, 336 b. 83, 561 c . 81, 1 44d. 0

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ANSWERS: 1 . 2 . 3 . 4 . 5 . 6 . 7 .

B D A B B C B

8 .C So l ut i o n: Ca s ha ndc a s he qui va l e nt s Ac c ount sr e c e i vabl e Al l owanc ef orba dde bt s Not er e c e i vabl e I nt e r e s tr e c e i vabl e Pe t t yc as hf und I nve s t me nti ne qui t ys e c ur i t i e s I nve s t me nti na s s oc i a t e I nve s t me nti ns ubs i di ar y I nve s t me nti nbonds Ca s hs ur r e nde rval ue Si nki ngf und Tot alfinanc i alas s e t s

1 0, 4 00 1 2, 0 00 ( 1, 6 0 0) 4 , 0 00 1 , 6 00 8 00 1 0, 4 0 0 1 6, 0 00 4 4, 0 00 9 , 6 00 9 , 6 00 1 6, 0 00 1 32, 8 0 0

9 . B( 1, 0 00s h.x200 )=20 0, 000f ai rval ue ,De c . 31, 20x1–250, 000=( 50, 000)unr e al i ze dl os s 1 0.C So l ut i o n: Sal epr i c e( 1, 000s ha r e sx30 0) Commi s s i onpai dont hes al e Ne tdi s pos alpr oc e e ds Car r yi ngamount–De c .31, 20x1( 1, 0 00x200) Re al i ze dg ai nons al e

30 0, 000 ( 60, 000) 2 40, 000 ( 2 00, 000) 40, 00 0

1 1.D 1 2.DCha nge si nf ai rval ue sa r er e c ogni z e di nOCI 1 3.A( 108–9 0)x10, 000=180, 0 00 1 4.A[ ( 10, 000x105 )-1 6, 00 0]–( 1, 000, 000+15, 000)=19, 000g ai n

1 5.C So l ut i o n: Fut ur ec as hflows Pr i nc i pal I nt e r e s t( 1M x12 %)

1 , 00 0 , 0 00 1 2 0, 00 0

PV@1 4 %, n=3 PVofP1 PVofor d. annui t y

PVf ac t or s 0. 6749 71516 2. 3216 32027

Pr e s e ntval ue

6 74, 9 7 2 2 78, 5 9 6

Page|5 9 53, 5 6 7

Fai rval ueonJ an. 1, 20x 1 Fut ur ec as hflows Pr i nc i pal I nt e r e s t( 1M x12 %)

PV@1 0 %,n=2

1 , 00 0 , 0 00 1 2 0, 00 0

PVf ac t or s

PVofP1

0. 8264 46281

PVofor d. annui t y

1. 7355 3719

Fai rval ueonDe c . 31, 20 x1 Fa i rva l uea sofDe c . 31 ,2 0 x1 Fa i rva l uea sofJ an. 1, 20 x1 Unr e al i ze dg ai n

1, 0 34 , 7 11 ( 95 3, 5 67 ) 81 , 1 44

Chapter 10 Investments in Debt Securities

1. I ft heac qui s i t i onc os tofi nve s t me nti nbondsi sl e s st ha nt hef ac eamount , t he r ei s a . di s c ount . b. pr e mi um. c . l os s . d. ga i n.

Pr e s e ntval ue

8 26, 4 4 6 20 8, 2 64 1 , 0 34, 7 11

Page|6 2. Theus eoft hee ffe c t i ve i nt e r e s tme t hodi na mor t i zi ngbondpr e mi umsanddi s c ount sr e s ul t si n a . agr e a t e ramountofi nt e r e s ti nc omeovert hel i f eoft hebondi s s uet ha nwoul dr e s ul tf r om us eof t hes t r ai ght l i neme t hod. b. avar yi ngamountbe i ngr e c or de dasi nt e r e s ti nc omef r om pe r i odt ope r i od. c . avar i a bl er a t eofr e t ur nont hebookval ueoft hei nve s t me nt . d. as mal l e ramountofi nt e r e s ti nc omeove rt hel i f eoft hebondi s s uet ha nwoul dr e s ul tf r om us eof t hes t r ai ght l i neme t hod. 3. I ft hee ffe c t i vei nt e r e s tr a t ei shi ghe rt hant henomi nalr a t e , t he r ei s a . di s c ount . b. pr e mi um. c . l os s . d. ga i n. 4. Thet r ueorac t ualr a t eofi nt e r e s tt ha tabondhol de re ar nsont hei nve s t me nt . a . nomi nalr a t e c . e ffe c t i vei nt e r e s tr a t e b. c ouponr a t e d. s t a t e dr a t e 5. I ti sat ypeofs e r i albondwhe r e i nt hehol de ri sgi ve nt her i ghtt oe xt e ndt hei ni t i a lma t ur i t yt oa l onge rma t ur i t yda t e . a . e xt e ndi bl ebond c . r e de e mabl ebond b. r e t r ac t abl ebond d. c al l a bl ebond 6. Subs e que ntt ot he i ri ni t i a lr e c ogni t i on, whi c hfinanc i a las s e t swi t hquot e dma r ke tpr i c e si nanac t i ve mar ke ta r eme as ur e da tf ai rval ue ? Fi na nc i a la s s e t s Fi na nc i a lAs s e t swi t hf a i r a ta mo r t i z e dc o s t v a l ue st hr o ug hpr o fito rl o s s a . Ye s No b. Ye s Ye s c . No Ye s d. No No 7. OnJ anuar y1,2 0x1,I mpr e s s e dCo.ac qui r e d8%,₱1, 000, 000f a c eamount ,4ye ar‘ t e r m’bondsf or ₱93 6, 603.Thebondsar eme as ur e da tamor t i ze dc os tandha veayi e l dr a t eof10%.How muc hi st he c ar r yi ngamountoft hei nve s t me ntonDe c e mbe r31, 20x2? a . 1, 000, 000 b. 950, 263 c . 965, 289 d. 981, 818 8. OnOc t obe r1,De nni sCompa nypur c ha s e d ₱2 00, 0 00f ac eval ue ,1 2% bondsa t98pl usac c r ue d i nt e r e s tand br oke r a ge f e e s and c l a s s i fie dt he m a sa mor t i ze dc os ta s s e t s .I nt e r e s ti s pai d s e mi annual l y on J anuar y1and J ul y1.Br oke r a gef e e sf ort hi st r ans ac t i on we r e ₱7 00.Atwha t amounts houl dt hi sa c qui s i t i onofbondsber e c or de d? a . 196, 000 b. 196, 700 c . 202, 00 0 d. 202, 7 00 9. On Augus t1,2004,Be t t i s Company a c qui r e d ₱120, 000 f a c e val ue ,1 0% bonds of Hans on Cor por a t i ona t104pl usa c c r ue di nt e r e s t .Thebondswe r eda t e dMa y1,2004,andma t ur eonApr i l 30,2009,wi t hi nt e r e s tpa yabl ee ac h Oc t obe r31 and Apr i l30.The bonds ar ec l as s i fie d as s ubs e que nt l yme as ur e da ta mor t i ze dc os t .Wha te nt r ys houl dBe t t i smaket or e c or dt hepur c ha s eof t hebondsonAugus t1, 2004 ? a .I nve s t me nti nbonds 12 4, 800 I nt e r e s tRe ve nue 3, 00 0 Cas h 127, 800 b. I nve s t me nti nbonds 12 7, 800 Cas h 127, 800 c .I nve s t me nti nbonds 12 7, 800 I nt e r e s tRe ve nue 3, 000 Cas h 124, 800

Page|7 d. He l dt oMa t ur i t ySe c ur i t i e s 1 20, 0 00 Pr e mi um onBonds 7, 800 Cas h

127, 8 00

10.OnApr i l30,20 x1, He i de l be r gCo. ac qui r e d₱10 0, 000f ac eamount ,10% bondsda t e dJ anua r y1,20x1 a t102. Thepur c ha s epr i c ei nc l ude sa c c r ue di nt e r e s t . How muc hi st hei ni t i a lc ar r yi ngamountoft he i nve s t me nt ? a . 102, 000 b. 99, 500 c . 98, 667 d. 105, 3 33 11.On J anuar y1,20x1,Hone yCo.i nt e ndst obuy3ye ar ,ze r oc ouponbondswi t hf ac eamountof ₱3, 000, 000andma t ur i t yva l ueof₱3 , 993, 00 0.Thee ffe c t i vei nt e r e s tr a t ei s16%.Thebondswi l lbe me a s ur e da tamor t i ze dc os t .How muc hi se s t i ma t e dpur c ha s epr i c eoft hebondsonJ anuar y1, 20 x1? a . 2, 299, 341b.2, 356, 214 c . 2, 558, 14 6 d. 2, 789, 123 12.OnJ anua r y1 ,20x1,Sant aCo.ac qui r e d10 %,₱1 , 000, 000bondsa t92.Commi s s i onpai dt obr oke r s amount e dt o₱9, 10 0.Thebondsar ec l a s s i fie dasi nve s t me ntme as ur e da tamor t i ze dc os t . Pr i nc i pali s dueonDe c e mber31,2 0x3buti nt e r e s ti sduea nnual l ye ve r yDe c e mbe r3 1.Thec ar r yi ngamountof t hei nve s t me ntonDe c e mbe r31, 20x1i smos tappr oxi ma t e l ye qualt o a . 949, 883. b. 958, 364. c . 973, 368. d. 938, 341. 13.OnJ anua r y1,2 0x1,Sol i c i tCo.a c qui r ed12%,₱1 , 000, 0 00bondsf or₱1, 0 49, 73 7.Thepr i nc i pali sdue onJ anuar y1,20x4buti nt e r e s ti sdueannua l l ye ve r yDe c e mbe r3 1.Thebondsar ec l as s i fie das i nve s t me ntme a s ur e da ta mor t i ze dc os t .Theyi e l dr a t eont hebondsi s10%.OnSept e mbe r30,20x2, al lt hebondswe r es ol da t1 10.Commi s s i onpa i dt ot hebr oke ra mount e dt o₱10, 000.How muc hi s t hegai n( l os s )ont hes al e ? a . ( 67, 686) b. 77, 686 c . ( 77, 686) d. ( 22, 31 4) 14.On J anua r y 1,20x1,MX Co.pur c ha s e d 10%,₱3 , 000, 000bondsf or₱3, 105, 726.Thebondsar e c l a s s i fie dasfina nc i a las s e tme a s ur e da tamor t i ze dc os t . Pr i nc i pa lont hebondsma t ur easf ol l ows : De c e mbe r31, 20x1 1, 000, 000 De c e mbe r31, 20x2 1, 000, 000 De c e mbe r31, 20x3, 1, 000, 000 To t a l 3, 000, 000 I nt e r e s ti sdueannual l ya te ac hye ar e nd. Thee ffe c t i vei nt e r e s tr a t eont hebondsi s8%.How muc hi st he c ur r e ntpor t i onoft hei nve s t me ntonDe c e mbe r31, 20x1? a . 1, 051, 542 b. 1, 035, 66 5 c .2, 054, 184 d. 1, 018, 519 Us et hef o l l o wi ngi nf o r ma t i o nf o rt hene xtfiveq ue s t i o ns : OnJ anua r y1,20x1,NFCP AR,I nc .ac qui r e d1 0%,₱1 , 000, 00 0bondsf or₱827, 13 5.Thebondsma t ur eon De c e mbe r31,20 x3andpa yannuali nt e r e s te ve r yDe c e mbe r31. NFCP AR,I nc .i nc ur r e dt r ans ac t i onc os t s of₱8 0, 0 00ont hea c qui s i t i on.Thee ffe c t i vei nt e r e s tr a t eadj us t e df ort hee ffe c toft het r ans ac t i onc os t si s 14 %. Thebondsar et obehe l dunde ra“hol dt oc ol l e c ta nds e l l ”bus i ne s smode l . I nf or ma t i ononf ai rval ue si s asf ol l ows : De c e mbe r31, 20x1……………………………. 98 De c e mbe r31, 20x2……………………………10 2 De c e mbe r31, 20x3……………………………10 0 15.How muc hi st hec ar r yi ngamountoft hei nve s t me ntonDe c e mbe r31, 20x1? a . 935, 134 b. 1, 002, 000 c . 980, 000 d. 965, 443

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16.How muc hi st heunr e al i z e dgai n( l os s )r e c ogni ze di not herc ompr e he ns i vei nc omei n2 0x1 ? a . 45, 866 b. ( 45, 866) c .( 37, 899) d. 0 17.How muc hi st hei nt e r e s ti nc omer ec ogni z e di n20x2? a . 126, 999 b. 130, 779 c . 135, 08 8 d. 144, 3 88 18.How muc hi st heunr e a l i ze dgai n( l os s )r e c ogni z e di not he rc ompr e he ns i vei nc omeonDe c e mbe r31, 20 x2? a . 9, 221 b. 40, 000 c .( 7, 219) d. 0 19.Di s r e gar dt hepr e vi ousque s t i ons .As s umet hebondswe r es ol df or₱900, 000onJ ul y1,20x2.How muc hi st het ot algai n( l os s )ont hes al e ,i nc l udi nganyr e c l as s i fic a t i onadj us t me ntt opr ofitorl os s ? a . ( 50, 000) b. 50, 000 c . ( 95, 389) d. ( 99, 52 3) 20.OnJ anua r y1,20x1,St ai r c as eGl as sCo.pur c ha s e d1 0%,₱1, 000, 000c a l l abl ebondsf or₱966, 199.The bondsma t ur ei n4ye a r s ’t i me .I nt e r e s ti sdueannual l ye ve r yDe c .31.Thei nve s t me nti sc l as s i fie das financ i a las s e tme as ur e da ta mor t i z e dc os t .Thee ffe c t i vei nt e r e s tr a t ei s12%.I ft hec ar r yi nga mount oft hei nve s t me ntonDe c e mbe r3 1,20 x1i s₱982, 143,wha ti st hee xpe c t e dhol di ngpe r i odf ort he i nve s t me nt ? a . 4ye ar s b. 3ye a r s c . 2ye ar s d. noneoft he s e

ANSWERS: 1. A 2. B 3. A 4. C 5. A 6. C 7. C Dat e 1 /1/x1 1 2/31 /x1 1 2/31 /x2 1 2/31 /x3 1 2/31 /x4

Col l e c t i ons 8 0, 0 0 0 8 0, 0 0 0 8 0, 0 0 0 8 0, 0 0 0

I nt e r e s ti nc ome

Amor t i zat i on

9 3, 6 60 9 5, 0 26 9 6, 5 29 9 8, 1 82

1 3, 6 60 1 5, 0 26 1 6, 5 29 1 8, 1 82

Pr e s e ntval ue 93 6, 6 03 9 50, 2 6 3 9 65, 2 8 9 9 81, 8 1 8 1 , 0 00, 0 00

8. B( 20 0Kx98%)+70 0=196, 700 9. A 10.C Pur c ha s epr i c eofbondsi nc l udi ngi nt e r e s t( 10 0 Kx10 2 %) Ac c r ue di nt e r e s tpur c has e d–J an. t oMa r .( 1 00Kx10 % x4/12) I ni t i alme as ur e me ntofi nve s t me nti nbonds 11.C Pur c has epr i c eofbonds=₱3, 9 93, 00 0xPVof₱1@16%, n=3 Pur c has epr i c eofbonds=( 3, 993, 000x0. 640 6577)=2, 558, 14 6 12.A

1 02, 0 0 0 ( 3, 3 3 3) 9 8, 6 67

Page|9 Ac qui s i t i onc os t( 1M x92 %) Tr ans ac t i onc os t s I ni t i alc ar r yi ngamount

9 20 , 0 00 9 , 10 0 9 2 9, 1 00

“ Tr i a la nde r r o r ”a ppr oac h: Fut ur ec a s hflowsxPV f ac t ora tx % =Pr e s entva l ue ( 1M xPVof₱1@x%, n=3 )+( 1 M x10% xPVofa nor di nar ya nnui t yof₱1@x%, n=3 )=9 29 , 10 0 Fi r s tt r i a l : ( us i ng1 3 %) Fut ur ec a s hflowsxPVf a c t ora tx % =PVori ni t i alc ar r yi nga mount  ( 1M xPVof₱1@1 3%, n=3)+( 1M x1 2% xPVofanor di nar yannui t yof₱1@1 3%, n=3)=9 2 9, 1 00  ( 1M x 0 . 6 93 050 162 27)+( 10 0, 0 00x2. 3 61 152 5979 2)=92 9, 1 00  ( 69 3, 0 50+2 3 6, 1 15)=9 29, 165appr ox i mat e s9 29, 100

I ft hedi ffe r e nc eof₱65i sde e me di mma t e r i al ,t hee ffe c t i vei nt e r e s tr a t et ha twi l lbeus e di s13%.The amor t i za t i ont abl eus i ngt hi sr a t ei spr e par e dasf ol l ows :

Dat e

Col l e c t i ons

I nt e r e s ti nc ome

Amor t i zat i on

1 00, 0 0 0 1 00, 0 0 0 1 00, 0 0 0

120, 783 123, 485 126, 538

2 0, 7 83 2 3, 4 85 2 6, 5 38

1/1 /x 1 1 2 /31 /x 1 1 2 /31 /x 2 1 2 /31 /x 3

Pr e s e ntval ue 9 29, 1 0 0 9 49, 8 8 3 9 73, 3 6 8 9 99, 9 0 6

13.D So l ut i o n: Dat e

Col l e c t i on s

I nt e r e s t i nc ome

Amor t i zat i o n

1 /1 /x1 1 2 /3 1/x 1 9 / 3 0/ x2

Pr e s e nt val ue 1 , 0 49, 7 3 7

1 20, 0 0 0 9 0, 0 0 0

1 04, 9 7 4 7 7, 6 03

1 5, 0 26 1 2, 3 97

1 , 03 4, 7 11 1 , 02 2, 3 14

S al epr i c ei nc l udi ngpur c has e di nt e r e s t( 1M x1 10 %) 1 , 1 00, 0 00 Pur c ha s e di nt e r e s t( 1 M x1 2 % x9 /12 ) ( 90, 0 0 0) Tr ans ac t i onc os t ( 10 , 0 00) Ne tp r o c e e ds 1 , 0 00, 0 00 Car r yi nga mount ( 1, 0 2 2, 3 14 ) Los sons al e ( 22 , 3 14)

14.B Dat e

Pr i nc i pal A

I nt e r e s tonout s t andi ngpr i nc i pal bal anc e b

De c . 31, 20 x1 De c . 31, 20 x2 De c . 31, 20 x3

1 , 0 00 , 0 00 1 , 0 00 , 0 00 1 , 0 00 , 0 00

( 3 , 00 0, 0 00x10 %)=3 0 0 , 0 00 ( 2 , 00 0, 0 00x10 %)=2 0 0 , 0 00 ( 1 , 00 0, 0 00x10 %)=1 0 0 , 0 00

Dat e

Col l e c t i ons

I nt e r e s ti nc ome

Amor t i z at i on

Pr e s e ntval ue

J a n.1 , 20 x 1 De c . 3 1, 20 x 1 De c . 3 1, 20 x 2

1, 30 0 , 0 00 1, 20 0 , 0 00

2 48 , 45 8 1 6 4 , 33 5

1 , 05 1 , 5 42 1 , 0 35 , 6 65

3 ,...