question archive On October 1, 2020, Peter Senen Company invests P3,000,000 in abound whose interest payments are linked to the price of gold
On October 1, 2020, Peter Senen Company invests P3,000,000 in abound whose interest payments are linked to the price of gold
Subject:AccountingPrice:2.87 Bought7
On October 1, 2020, Peter Senen Company invests P3,000,000 in abound whose interest payments are linked to the price of gold. On October 1, 2020, the derivative contract has a fair value of P150,000. Peter Senen Company has a business model with the objective of trading all financial instruments.
What is the carrying value of the available for sale investment on October 1, 2020?
a. P150,000
b. P2,850,000
c. P3,000,000
d. P3,150,000
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The answer is P150000
Because financial instruments are traded at fare value price only agree by both buyer and seller.
So, if we want to sale the investment on 1st Oct 2020 it should be on its fare value only.
