# On May 1, 2020, GAL Co. purcha

On May 1, 2020, GAL Co. purchased a short-term P2,000,000 face value,
9% debt instruments for P1,860,000 including the accrued interest and
classified it as a trading security. The debt instruments mature on January
1, 2023, and pay interest semi-annually on January 1 and July 1. On
December 31, 2020, the fair market value of the instruments is 98%. On
March 2, 2021, GAL Co. sold the trading security for P1,980,000. How
much will be recognized as income on the 2020 income statement?

A. P100,000
B. P120,000
C. P160,000
D. P280,000

# On May 1, 2020, GAL Co. purcha

On May 1, 2020, GAL Co. purchased a short-term P2,000,000 face value, 9% debt instruments for P1,860,000 including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2023, and pay interest semi-annually on January 1 and July 1. On December 31, 2020, the fair market value of the instruments is 98%. On March 2, 2021, GAL Co. sold the trading security for P1,980,000. How much will be recognized as income on the 2020 income statement?

P100,000

P120,000

P160,000

P280,000

# On May 1, 2020, GAL Co. purcha

On May 1, 2020, GAL Co. purchased a short-term P2,000,000 face value, 9% debt instruments for P1,860,000 including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2023, and pay interest semi-annually on January 1 and July 1. On December 31, 2020, the fair market value of the instruments is 98%. On March 2, 2021, GAL Co. sold the trading security for P1,980,000. How much will be recognized as income on the 2020 income statement? *

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