Reference no: EM132709632

Questions -

Q1. An entity issued 5,000, 5-year bonds, face amount of P1,000 each at 110. The bonds contain a conversion privilege that provides for an exchange of a P1,000 bond for 10 equity shares with par value of P100. It is reliably determined that the bonds would sell only at 95 without the conversion privilege. How much would be credited to bonds payable?

a. 5,500,000

b. 4,750,000

c. 5,000,000

d. 250,000

Q2. On January 1, 20x8, CLI Corp. purchased land by issuing P1 million non-interest bearing note payable after 3 years. The company also purchased an equipment by issuing a non-interest promissory note that requires three annual installment payments of P100,000 every December 31. The interest rate charged on the notes is 10%. The present value of P1 at 10% for 3 periods is 0.75131 while the present value of an ordinary annuity of P1 at 10% for 3 periods is 2.4868. What is the carrying value of the P300,000 face value note at December 31, 20x8?

a. P273,548

b. P148,680

c. P173,548

d. P248,680