Reference no: EM132713031

Questions -

Q1. On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P4,800,000. The bonds mature on December 31, 20x3 and pay annual interest of 10% every December 31. The entity incurs bond issue cost of P473,767. The effective interest adjusted for bond issue costs is 16%. Compute for the initial carrying amount of the bonds.

Q2. On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P4,800,000. The bonds mature on December 31, 20x3 and pay annual interest of 10% every December 31. The entity incurs bond issue cost of P473,767. The effective interest adjusted for bond issue costs is 16%. Compute for net discount or net premium (including the effect of the bond issue cost) from the issuance on initial recognition.

Q3. On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P4,800,000. The bonds mature on December 31, 20x3 and pay annual interest of 10% every December 31. The entity incurs bond issue cost of P473,767. The effective interest adjusted for bond issue costs is 16%. Are the periodic interest payments or greater than or less than the periodic interest expenses? Show proof of your answer.

Q4. On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P4,800,000. The bonds mature on December 31, 20x3 and pay annual interest of 10% every December 31. The entity incurs bond issue cost of P473,767. The effective interest adjusted for bond issue costs is 16%. All entries during the term of the bonds.