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What is carrying amount of the above liabilities at december

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Reference no: EM133140495

Question - You are auditing the various liability accounts of SAKURA CORP, an entity that follows a calendar period of reporting, for the year ended December 31, 2021. The following information was presented to you for your evaluation:

On January 1, 2021, SAKURA acquired machinery from JAPAN INC. In lieu of cash payment, SAKURA have JAPAN a 3-year, P600,000, noninterest-bearing note payable. Principal is due in equal payments every December 31 beginning on December 31, 2021. The prevailing interest rate for this type of note is 12%.

On January 1, 2021, SAKURA CORP. obtains 10%, P1,500,000 bank loan from a certain bank. The bank charged a P91,155 non-refundable origination fee. The principal will mature 4 years after, which is December 31, 2021 but interest is payable every December 31.

On January 1, 2021, SAKURA received P1,077,200 for P1,000,000 face amount 12% bonds. The bonds were sold to yield 10%. Interest is payable semiannually every January 1 and July 1. On December 31, Page 4 of 9 2019, the fair value of the bonds is P1,064,600. The change in fair value of the bonds is attributable to market factors.

On April 1, 2021, SAKURA acquired an office equipment from a certain supplier in exchange for a 3- year, 3%, P200,000 interest-bearing note payable. The interest is payable every December 31 while the principal shall be payable as follows: April 1, 2022 P 120,000 April 1, 2023 40,000 April 1, 2024 40,000 The prevailing rate of interest for this type of note is 12%.

On September 1, 2022, SAKURA CORP. issued a 3 year promissory note with a face amount of P300,000. The nominal interest rate of the loan is 7%. Interest payments are required annually every September 1. All of the above financial liabilities are measured at amortized cost.

Required -

1. What is carrying amount of the above liabilities at December 31, 2021?

2. How much is the total current and non-current liabilities as of December 31, 2021?

3. Redo the above requirements assuming the entity has elected the fair value option for valuing bonds.

Reference no: EM133140495

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