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Question 5 Effortless Struggle Inc. (ESI), a publicly traded company that follows IFRS, issued $400,000 of six-year, 8% bonds on May 1, 2020. These
Question 5 Effortless Struggle Inc. (ESI), a publicly traded company that follows IFRS, issued $400,000 of six-year, 8% bonds on May 1, 2020. These bonds pay interest on a semi-annual basis on November 1 and May 1. The bonds were issued to yield a market interest rate of 7%. Required: a) b) Calculate the issue price of the bonds and prepare the journal entry to record this issue. Assuming that ESI has a December 31 year end, prepare all the required journal entries for 2020 and 2021. Question 6 Understand the Grind Inc. (UTG) issues a $257,000, four-year, non-interest-bearing note on January 1, 2021. In return UTG receives cash of $175,000. UTG uses the effective interest rate method. Required: a) Prepare an amortization table for the note payable. b) Prepare the journal entries at the date of issue and at year end the first year (December 31) to recognize interest. Question 7 Southern Boyz Corporation (SBC) have an outstanding loan that is due at the end of 2020. The debt is being refinanced with a six-year loan and the agreement to refinance the debt is signed on January 4, 2021. Required: a) Discuss how the loan would be classified (and why) on the December 31, 2020 financial statements under IFRS. b) Discuss how the loan would be classified (and why) on the December 31, 2020 financial statements under ASPE
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