Reference no: EM132774644
You are the Audit Associate for the audit engagement of XYZ, Inc., a manufacturer and retailer of appliances. You were assigned to audit the Company's liabilities for year ended 31 December 2019. During your examination of the Company's Financial Statement Line Items relating to liabilities, you were able to gather the following information:
1. The Company has a PHP1,000,000 short-term obligation due on March 1, 2020. XYZ, Inc. can request the extension of the obligation to December 31, 2022, provided XYZ, Inc. agrees to provide additional collateral. An agreement was reached to extend the loan's maturity on February 12, 2020.
2. XYZ, Inc. has a notes payable amounting to PHP1,350,000 which is due on January 28, 2020. On January 24, 2020, the company issued 5,000 ordinary shares for P150/share, the proceeds of which including a cash payment of PHP600,000, were used to fully settle the debt.
3. XYZ, Inc. has another loan due on July 1, 2020 in the amount of PHP5,000,000. The Company intends to refinance the note by issuing long-term bonds. A PHP10,000,000 bond offering was competed in March 2020. Portion of the proceeds will be used to repay the note payable at maturity.
4. The Company also issued serial bonds with a face value of P5,000,000, and bearing 12% interest. The bonds are payable in semiannual installment of PHP500,000 due May 1 and November 1 of each year. The last bond is to be paid on November 1, 2025. The interest is also paid semiannually.
5. You also noted an obligation amounting to PHP4,000,000. The obligation is a loan that will mature over 8 years in the amount of PHP500,000 per year. The loan is dated September 1, 2019, and the first maturity date is September 1, 2020.
6. There also exists a debt obligation of PHP600,000 maturing on December 31, 2022. The debt is callable on demand by the lender at any time.
7. XYZ issued a PHP2,000,000, 12% mortgage note on October 1, 2018 with a term of 10 years. The terms of the note give the holder the right to demand immediate payment if the entity fails to make a monthly interest payment within 10 days of the date the payment is due. On December 31, 2019, XYZ, Inc. failed to pay interest for three consecutive months. The creditor waived such breach on January 31, 2020.
8. Bank notes payable which include two separate notes payable to ABC Bank:
a. A PHP3,000,000, 10% note issued March 1, 2018, payable on demand. Interest is payable every 6 months.
b. A one-year, P5,000,000 11% note issued January 2, 2019. On December 31, 2019, XYZ, Inc. came into agreement with ABC Bank to replace the note with a 5-year, PHP15,000,000 10% note to be issued January 2, 2020.
Problem a: Compute for:
1. Current Liabilities
2. Non-current Liabilities