Intermediate accounting 1

1?. _.._II incurred transaction costs of $0,000 on the acquisition The bonds mature on Dec 31, 20x3 and pay annual interest EVE]? Dec. 31. The effective interest rate is 14%. The quoted Price on Dec. 31, 20):] was 98. The bonds were sold at 94 on 1111?; 1. 20x2. Transaction costs incurred on the sale amounted to Homo. What amount of gain (loss) is recognized in pmt .31. loss on July 1, 20x1 if the bonds were classied as: Amortized cast FVOCI Amortized cost FVOCI a. (49,523) (49,523} r. (99,523) (99,523) b. (49,523) 0 d. (99,523) (145339) On Ian. 1, 20x1, Yngwie Co. purchased P6300000. 10% bonds tamed by Malmsteen, Inc. for P5,116,292. The bonds together with oompounded interest are clue on Dec. 31, 20x3. What is the effective interest rate on the bonds and how much is the carrying amount of the investment on Dec. 31, 20x2? 1. 18%; ?397.017 c.16%;6,884,483 b. 16%: 5.624.483 d. 8%; 4,928,??4 Investments in Debt Securities 559 13. Scaffolding Co. is contemplating on investing on 3-year, P1,000,000, 12% bonds to be classified as investment measured at amortized cost. Principal is due at maturity but interest is due semi-annually every July 1 and December 31. The current market rate on January 1, 20x1 is 14%. How much is the estimated purchase price of the bonds on January 1, 20x1? a. 960,964 b. 952,334 c. 949,812 d. 936,431 @ Hint: Test-check your answer by preparing an amortization table. The amortized cost at maturity date should be equal to the face amount.) 14. On Jan. 1, 20x1, Joe Satriani Co. purchased P6,000,000 face amount, 10% bonds at 96. Joe incurred transaction costs of P40,610 on the acquisition. The bonds mature in three equal annual installments every Dec. 31. Interest on the outstanding principal balance of the bonds is also due annually at each year-end. What is the effective interest rate and how much is the current portion of the bonds on Dec. 31, 20x1? a. 6%; 863,247 c. 11%; 1,002,249 b. 9%; 932,341 d. 12%; 1,932,398 15. On January 1, 20x1, Washing Co. contemplates on acquiring P3,000,000, 10% bonds to be classified as investment measured at amortized cost. Principal on the bonds will mature in four semi-annual installments as follows: July 1, 20x1 1,200,000 December 31, 20x1 800,000 July 1, 20x2 600,000 December 31, 20x2 400,000 Total 3,000,000 Interest on the outstanding principal balance is also due semi- annually. The effective rate on January 1, 20x1 is 12%. How much is the estimated purchase price of the bonds on January 1, 20x1? a. 2,449,112 b. 2,494,112 c. 2,782,667 d. 2,944,112 16. On Jan. 1, 20x1, Bok Choy Co. acquired P1,000,000 face amount, 10% bonds of Pechay, Inc. for P827,135. Bok Choy558 Chapter 10 b. 11%; 6,392 d. 9%; 4,208 8. How much is the unamortized bond discount or premium on Dec. 31, 20x2 if the bonds were measured at amortized cost? a. 4,587 discount c. 8,795 premium b. 5,129 discount d. 4,587 premium 9. What amounts of fair value gain (loss) is recognized in other comprehensive income (OCI) and in equity in 20x2 if the bonds were measured at FVOCI? OCI Equity OCI Equity a. 15,413 14,208 c. 14,208 15,413 b. 17,899 32,410 d. 1,205 15,413 10. How much is the gain (loss) if half of the bonds were sold on July 1, 20x3 at 103, transaction costs of P7,000 were incurred on the sale, and the bonds were measured at amortized cost? a. (13,147) b. (78,123) C. (25,647) d. (6,541) 11. On Jan. 1, 20x1, Forgiven Co. acquires 1,000, P5,000 face value, 10%, 5-year 'term' bonds for P4,639,522. The bonds are measured at fair value through other comprehensive income. The bonds are quoted at 98 on Dec. 31, 20x1. How much is the interest income and the fair value gain (loss) in 20x1? a. 556,743; 203,735 c. 556,743; 260,478 b. 296,298; (13,772) d. 412,516; 21,354 12. On August 1, 20x1, Lunch Co. acquired P1,000,000, 12% bonds dated January 1, 20x1 at 98 including interest. The bonds mature on December 31, 20x3 but pays semiannual interest every January 1 and July 1. The bonds are measured at amortized cost. How much is the initial measurement of the investment? a. 1,000,000 b. 980,000 c. 970,000 d. 910,000