The long-term liability disclosure note to the Year 2 annual report of Penguin Pilots Inc. included the following. December 31 ($ millions) 6% Convertible senior debentures due Year 9 Year 2 Year 1 $145 $0 Additional assumptions: 1. Debentures were issued at par on January 1 in Year 2 and pay interest each December 31. 2. Debentures retired were scheduled to mature December 31, Year 9. 3. Assume instead that Alaska Air decides to retire the bonds at December 31 of Year 2, paying the fair value of the bonds, which reflected a yield rate of 5%. Required a. Prepare the December 31, Year 2, interest payment entry. • Note: Round your answers to the nearest million dollars. b. Prepare the December 31, Year 2, bond retirement entry. ● Note: Round your answers to the nearest million dollars.

The long-term liability disclosure note to the Year 2 annual report of Penguin Pilots Inc. included the following. December 31 ($ millions) 6% Convertible senior debentures due Year 9 Year 2 Year 1 $145 $0 Additional assumptions: 1. Debentures were issued at par on January 1 in Year 2 and pay interest each December 31. 2. Debentures retired were scheduled to mature December 31, Year 9. 3. Assume instead that Alaska Air decides to retire the bonds at December 31 of Year 2, paying the fair value of the bonds, which reflected a yield rate of 5%. Required a. Prepare the December 31, Year 2, interest payment entry. • Note: Round your answers to the nearest million dollars. b. Prepare the December 31, Year 2, bond retirement entry. ● Note: Round your answers to the nearest million dollars.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 16E

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ANSWER IN GOOD ACCOUNTING FORM. THANK YOU :) On April 30, CHIA-SEED Company issued 7,000 of 15% ₱1,000 bonds at 95. The bonds have a five-year term and interest is payable semi-annually, May 1 and November 1. The entity elected the fair value option. The entity paid bond issue cost of ₱125,000. On December 31, 2021, the fair value of the bonds is 104. It is reliably determined that the fair value increase comprised of 25% attributable to credit risk and the remainder is attributable to change in market interest rate. What amount of gain or loss should be recognized in profit or loss for 2021 to conform with the fair value option?