ANSWER ONLY

Question 11

Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to

Group of answer choices

the market rate multiplied by the beginning-of-period carrying amount of the bonds.

the market rate of interest multiplied by the face value of the bonds.

the stated (nominal) rate of interest multiplied by the face value of the bonds.

the stated rate multiplied by the beginning-of-period carrying amount of the bonds.

Question 12

The proceeds from bonds issued with nondetachable share warrants shall be accounted for

Group of answer choices

entirely as bonds payable.

partly as unearned revenue and partly as bonds payable.

entirely as shareholders' equity.

partly as bonds payable and partly as shareholders' equity.

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Question 13

The printing costs and legal fees associated with the issuance of bonds should

Group of answer choices

be reported as a deduction from the face amount of bonds payable.

be expensed when incurred.

be recorded as a reduction of the bond issue amount and then amortized over the life of the bonds.

not be reported as an expense until the period the bonds mature or are retired.

Question 14

How are the proceeds from issuing a compound instrument allocated between the liability and equity components?

Group of answer choices

First, the liability component is measured at fair value, and then the remainder of the proceeds is allocated to the equity component.

The equity component is measured at its intrinsic value. The liability component is measured at the face amount less the intrinsic value of the equity component.

First, the fair values of both the equity component and the liability component are estimated. Then, the proceeds are allocated to the liability and equity components based on the relation between the estimated fair value.

First, the equity component is measured at fair value, and then the remainder of the proceeds is allocated to the liability component.

Question 15

After initial recognition, bonds payable shall be measured at

Group of answer choices

either amortized cost using the effective interest method or fair value through profit or loss.

either amortized cost using the effective interest method or fair value through other comprehensive income.

fair value through profit or loss.

amortized cost using the effective interest method.

Question 16

Which of the following statements is incorrect in relation to the fair value option of measuring note payable?

Group of answer choices

At initial recognition, an entity may irrevocable designate the note payable as at fair value through other comprehensive income.

At initial recognition, an entity may irrevocably designate the note payable as at fair value through profit or loss.

The interest expense on the note payable is recognized using the nominal or stated interest rate.

After initial recognition, the note payable is remeasured at fair value at every year-end and any changes in fair value are recognized in profit or loss.

Question 17

In a debt settlement in which the debt is continued with modified terms, a gain should be recognized at the date of settlement whenever the

Group of answer choices

present value of the debt is less than the present value of the future cash flows.

carrying amount of the debt is greater than the present value of the future cash flows.

carrying amount of the debt is less than the total future cash flows.

present value of the debt is greater than the present value of the future cash flows.

Question 18

Fossil Co. issued P10,000,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. In calculating the issue price of the bonds,

Group of answer choices

Multiply the principal by the table value for 20 periods and 5% from the present value of 1 table and multiply P500,000 by the table value for 20 periods and 5% from the present value of an annuity table.

Multiply the principal by the table value for 10 periods and 10% from the present value of 1 table and multiply P1,000,000 by the table value for 10 periods and 10% from the present value of an annuity table.

Multiply the principal by the table value for 10 periods and 8% from the present value of 1 table and multiply P1,000,000 by the table value for 10 periods and 8% from the present value of an annuity table.

Multiply the principal by the table value for 20 periods and 4% from the present value of 1 table and multiply P500,000 by the table value for 20 periods and 4% from the present value of an annuity table.

Question 19

The major difference between convertible debt and share warrants is that upon exercise of the warrants

Group of answer choices

the holder has to pay a certain amount of cash to obtain the shares.

no share premium can be a part of the transaction.

the shares involved are restricted and can only be sold by the recipient after a set period of time.

the shares are held by the company for a defined period of time before they are issued to the warrant holder.

Question 20

An entity shall initially measure equity instruments issued to extinguish a financial liability at

Group of answer choices

carrying amount of the liability extinguished.

fair value of the liability extinguished.

fair value of the equity instruments issued.

par value of the equity instruments issued