Reference no: EM132709283
Questions -
(a) On March 31, 20x6, Harvard issued for $1,774,000, $2,000,000 face amount of its 10%, $1,000 bonds. The bonds were issued to yield 12%. The bonds are dated July 1, 20x6 and mature on July 1, 20x19. Interest is payable annually on July 1. Harvard uses the interest method to amortize bond discount. Determine the carrying value of the Bonds on December 31, 20x6?
(b) Quaker Company distributed coupons to promote new products. On October 1, 2017, the entity nailed 100,000 coupons for $45 off each box of cereal purchased. The entity expected 12,000 of these coupons to be redeemed before the December 31, 2017 expiration date. It takes 30 days from the redemption date for the entity to receive the coupons from the retailers. The entity reimbursed the retailers an additional $5 for each coupon redeemed. On December 31, 2017, the entity had paid retailers $250,000 related to these coupons and had 5,000 coupons on hand that had not been processed for payment. What amount should be reported as liability for coupons on December 31, 2017?
(c) Merriam Ltd. commenced operations in the current year. A number of expenditures were made during the current year that were debited to one account intangible assets. (refer to data below) What total amount should be reported as intangible assets?
-State incorporation fees and legal costs related to organizing the corporation $100
-Fire insurance premium for three-year period $60
-Purchase of copyright $200
-Legal fees for filing a patent on new product resulting from a Research and Development project $50
-Legal fees for success defense of the patent developed from the project $10
-Entered into a 10-year franchise agreement with a franchisor $500
-Advertising Cost $150
-Purchase of all the outstanding ordinary shares of an acquiree. On the date of purchase, the acquire had total assets of $6,000 at fair value and total liabilities of $2,200 at fair value $5,000
(d) Terry Co. offered a contest in which the winner would receive $500,000 payable over twenty years. On December 31, 2019, Jason Company announced the winner of the contest and signed a note payable to the winner for $500,000 payable in $25,000 installments every January 31. On December 31, 2019, Terry Co. purchased an annuity for $209,125 to provide the $475,000 prize remaining after the first $25,000 installment which was paid on January 31, 2020. On December 31, 2019, what amount should be reported as note payable-contest winner, net of current portion?
(e) Included in Meat Corporation's liability account balances at December 31, 20x6 was a Note payable for $1,400,000. The principal amount of the note payable is $1,400,000 and bears interest at 15%. The note is dated April 1, 20x6 and is payable in four equal installments of $350,000 beginning April 1, 20x7. The first principal and interest payment was made on April 1, 20x7. Determine the non-current portion of the note payable as of December 31, 20x7
(f) On February 5, 2020, an employee filed a $1,000,000 lawsuit against Steel Company for damages suffered when one of Steel's plant exploded on December 9, 2019. The legal counsel believed the entity would probably lose the lawsuit and estimated the loss to be $250,000. The employee offered to settle the lawsuit out of court for $450,000 but the entity did not agree to the settlement. On December 31, 2019, what amount should be reported as liability from lawsuit?
(g) On March 31, 20x7, Pepe issued for $887,000, $1,000,000 face amount of its 10%, $500,000 bonds. The bonds were issued to yield 12%. The bonds are dated July 1, 20x7 and mature on July 1, 20x10. Interest is payable annually on July 1. HARD uses the interest method to amortize bond discount. Determine the interest expense of the Bonds on December 31, 20x8
(h) One Company sells 500 laptop computers in 20X9 for $100 each. Each one has a one-year warranty. It is estimated that the warranty cost for each computer will be $10 for each computer. In 20X9, the company actually incurs warranty cost of $1,000. What is the warranty expense for 20x9?
(i) Vertu Co. is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Vertu has a $2,500,000 bank loan payable with Chase Bank. The bank accepted an equity interest in Vertu Company in the form of 200,000 ordinary shares quoted at $12 per share. The par value is $10 per share. The fair value of the bank loan payable on the date of restructuring is $2,200,000. What amount should be recognized as gain from debt extinguishment as a result of the equity swap?
(j) At the beginning of current year, Kreem Company issued 5,000 convertible bonds payable. The bonds have a three-year term and are issued at 110 with a face amount of $1,000 per bond. Interest is payable annually in arrears at a nominal 6% interest rate. Each bond is convertible at anytime up to maturity into 100 ordinary shares with par value of $5. When the bonds are issued, the prevailing market interest rate for similar debt instrument without conversion option is 9%. The present value of 1 at 9% for 3 periods is .77 and the present value of an ordinary annuity of 1 at 9% for 3 periods is 2.53. What amount should be reported as equity component of the original issuance of the convertible bonds payable?
(k) Included in Lexi Corporation's liability account balances at December 31, 20x6 was a Note payable for $1,400,000. The principal amount of the note payable is $1,400,000 and bears interest at 15%. The note is dated April 1, 20x6 and is payable in four equal installments of $350,000 beginning April 1, 20x7. The first principal and interest payment was made on April 1, 20x7. Determine the interest expense for 20x7
What are the necessary steps to be undertaken? What could possibly be the best answers at each situations?