Reference no: EM132670355
Questions -
Q1. On January 1, 2020, ABC Company converted its 12%, P1,500,000 face value bonds payable with carrying amount of P1,552,049 for 20,000 ordinary shares with a par value of P50. The bonds were originally issued to yield 10%. The fair value of the bonds on the date of retirement is P1,600,000. Assuming that the bonds are convertible and the share premium from conversion option was P60,000. How much is the gain (loss) on conversion of the bonds to be recognized in the profit or loss during the period? (Round off present value factors up to four decimal places, in presenting your final answer round-up to the nearest peso)
Q2. On September 1, 2021, Confused Company purchased a machine. The purchase agreement required Confuse to pay an initial fee payment of P700,000 plus four P300,000 payments due every four (4) months, the first payment due December 31, 2021. The market interest rate is 12%. The present and future value tables at 4% for four (4) periods were as follows: Present value of P 1, 0.85; Present value of an ordinary annuity of P1, 3.63; Future value of P 1, 1.17, Future value of an ordinary annuity of P1, 4.25. What is the fair value of the note on December 31, 2021.
Q3. On December 31, 2020, ABC Co. had outstanding 12%, P5,000,000 face value bonds maturing on December 31 2023. Interest was payable semiannually every June 30 and December 31. On December 31, 2020, after amortization was recorded for the period, the unamortized bond discount and bond issue cost were P500,000 and P300,000, respectively. On that date ABC acquired all its outstanding bond on the open market at 98 and retired them. At December 31 2020, what amount should ABC recognize as pretax loss on early extinguishment of bonds? (Round off present value factors up to four decimal places, in presenting your final answer round-up to the nearest peso)
Q4. GREENTREE COMPANY acquires a new manufacturing equipment on January 1, 20x6, on instalment basis. The deferred payment contract provides for a down payment of P300,000 and an 8-year note for P3,104,160. The note is to be paid in 8 equal annual instalment payments of P388,020, including 10% interest. The payments are to be made on December 31 of each year, beginning December 31, 20x6. The equipment has a cash price equivalent of P2,370,000. GREENTREE's financial year-end is December 31. Determine the carrying value of note payable at December 31, 2017.
Q5. GREENTREE COMPANY acquires a new manufacturing equipment on January 1, 20x6, on instalment basis. The deferred payment contract provides for a down payment of P300,000 and an 8-year note for P3,104,160. The note is to be paid in 8 equal annual instalment payments of P388,020, including 10% interest. The payments are to be made on December 31 of each year, beginning December 31, 20x6. The equipment has a cash price equivalent of P2,370,000. GREENTREE's financial year-end is December 31. Determine the amount of interest expense to be recognized in 20x6.
Q6. An entity has an outstanding bond payable amounting to P2,500,000 with accrued interest of P250,000. To settle this debt, the entity issued 1,000, P1,000 par value shares, currently selling at P2,250 per share. The bonds have a current fair value of P3,150,000. Determine the gain or (loss) on extinguishment of debt.
Q7. On January 1, 2020 ABC Co. issued 3-year bonds with a face value of P1,200,000 and stated interest of 8% per year. The bonds mature in 3 equal annual installments every December 31. The interest is also payable every December 31. The bonds were acquired to yield 10%. The bonds were appropriately classified as financial liability at amortized cost. Compute for the carrying value on December 31, 2021. (Round off present value factors up to four decimal places, in presenting your final answer round-up to the nearest peso)
Q8. On January 1, 2020, ABC co. issued 3-year bonds with a face value of P1,200,000 and stated interest of 8% per year payable annually on December 31. The bonds were acquired to yield 10%. The bonds were appropriately classified as financial liability at amortized cost. Compute for the interest expense for 2020. (Round off present value factors up to four decimal places, in presenting your final answer round-up to the nearest peso)
Q9. An entity has an outstanding bond payable amounting to P2,500,000 with accrued interst of P250,000. To settle this debt, the entity issued 1,000, P1,000 par value shares, currently selling at P2,250 per share. The bonds have a current fair value of P3,150,000. Determine the increase in the entity's stockholders' equity.
Q10. On January 1, 2020 ABC Co. issued 10% 3-year bonds with face value of P5,000,000 at 98. Additionally, ABC Co. paid a bond issue cost of P140,000. After consideration of bond issue costs to the initial measurement, the calculated effective interest rate is 12%. The interest is payable annually on December 31. ABC Co. uses the effective interest method in amortizing discount and issue cost. What is the value of premium or discount on December 31, 2020? (Round off present value factors up to four decimal places, in presenting your final answer round-up to the nearest peso)