Question
GOOD AFTERNOON TUTOR! CAN YOU HELP ME WITH MY ASSIGNMENT WITH INTERMEDIATE ACCOUNTING 2? THANK YOU IN ADVANCE TUTOR! WORK ON SHEETS! PART I (PROBLEM-SOLVING)
GOOD AFTERNOON TUTOR! CAN YOU HELP ME WITH MY ASSIGNMENT WITH INTERMEDIATE ACCOUNTING 2? THANK YOU IN ADVANCE TUTOR! WORK ON SHEETS!
PART I (PROBLEM-SOLVING)
Determine the requirement for each of the following independent cases. Use a 10-column worksheet for the solution.
Case 1: Eveready Company
Eveready Company issued P100,000 of 8% term bonds on January 1, 2X19, due on January 1, 2X24, with interest payable on July 1 and January 1. The company's investors are willing to accept the bond at an effective nterest rate of 6%.
- What is the present value of P100,000 bonds due in five (5) years at 6% interest payable semiannually?
- What is the present value of P 4,000 interest payable?
- What amount would the investors pay for that particular bond?
- What is the premium/discount at the date of issuance?
- Provide entry in the books of Eveready on January 1, 2X19.
Case 2: Toyota Corporation
On March 1, 2X19, Toyota Corporation issued at 103 plus accrued interest, 500 of its 9%, P500 bonds. The bonds are dated January 1, 2X19 and mature on January 1, 2X29. Interest is payable semiannually on January 1 and July 1. Toyota paid transaction costs amounting to P5,000.
- What is the bond issue price at the date of issuance?
- What amount is the accrued interest at the date of issuance?
- What is the net cash receipt from the bond issuance?
PART II (SHORT ANSWER)
In no more than three (3) sentences, answer the following questions:
- When does the discount on bonds payable arise?
- When does the premium on bonds payable arise?
Applying IFRS 9 Financial Instruments, what is the initial measurement of bonds payable?
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