6 Landis Co. purchased P500,000 of 8%, 5-year bonds (DI@FVTOCI) from Ritter, Inc. on January 1, 2022, with interest payable on July 1 and January 1. The bonds sold for P520,790 at an effective interest rate of 7%. Using the effective-interest method, Landis Co. decreased the Debt Investments account for the Ritter, Inc. bonds on July 1, 2022 and December 31, 2022 by the amortized premiums of P1,770 and P1,830, respectively. At December 31, 2022, the fair value of the Ritter, Inc. bonds was P530,000. At April 1, 2023, Landis Co. sold the Ritter bonds for P515,000. After accruing for interest, the carrying value of the Ritter bonds on April 1, 2023 was P516,875. What should Landis Co. report as a gain (or loss) on the bonds?
6
Landis Co. purchased P500,000 of 8%, 5-year bonds (DI@FVTOCI) from Ritter, Inc. on January 1, 2022, with interest payable on July 1 and January 1. The bonds sold for P520,790 at an effective interest rate of 7%. Using the effective-interest method, Landis Co. decreased the Debt Investments account for the Ritter, Inc. bonds on July 1, 2022 and December 31, 2022 by the amortized premiums of P1,770 and P1,830, respectively. At December 31, 2022, the fair value of the Ritter, Inc. bonds was P530,000.
At April 1, 2023, Landis Co. sold the Ritter bonds for P515,000. After accruing for interest, the carrying value of the Ritter bonds on April 1, 2023 was P516,875. What should Landis Co. report as a gain (or loss) on the bonds?
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