Show the solution. VICO Company had bonds payable with face amount of P5, 000, 000 and carrying amount ofP4,800,000. In addition, unpaid interest on the bonds was accrued in the amount of P250,000.The creditor had agreed to the settlement of the bonds payable in exchange for 50,000shares of P50 par value.The shares have no reliable measure of fair value. However, the bonds are quoted at P3,500, 000.What amount should be recorded as share premium from the issuance of the shares?

Share premium is the amount over and above the par value received by the company. It is the…

Answered: VICO Company had bonds payable with…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7MCQ

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OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. A. more than 6% B. less than 6% C. equal to 6% D. cannot be determined from the information given.
On September 30, Franz Corporation notices a decline in value of its investment in held-to-maturity bonds. On that date, the carrying value of the bonds is 38,500 and the fair value is 22,980. Franz evaluation of this investment reveals that expected credit losses are 10,000. Prepare the journal entry to record the impairment.
ABC Company is in financial difficulties and agreed to issue 20,000 of its P20 par value shares in settlement of its loan from a bank of P1,000,000. On this date, the accrued interest not yet paid by ABC Company amounted to P120,000. The fair market value of the shares on this date is P40 per share while the fair market value of the liability is P1,200,000. According to our standards, what amount of gain or loss from extinguishment of debt shall be recognized from this equity swap?
On June 1, 20x1, ABC Co acquired investment in bonds with detachable warrants for P1,950,000. The bonds have face amount of P2,000,000. Without the detachable warrants, the bonds are selling at P1,800,000. The warrants have fair value of P150,000. ABC Co business model requires debts instruments to be measured at FVOCI and Equity instruments at fair value. Subsequently, warrants were sold for P120,000. Requirement: Prepare Journal Entries on June 1 and selling of warrants.
ABC Company , a holder of P1,000,000 XYZ Company bonds, collected the interest due on March 31, year 1, and then sold the bonds to W, Inc. for P975,000. On that date, XYZ, a 75% owner of W had P1,075,000 carrying amount for the bonds. What was the effect of W's purchase of XYZ's bond on the noncontrolling interest amount reported in XYZ's March 31, year 1 consolidated balance sheet? (Answer format: amount increase/decrease e.g. 10000 decrease, if no effect, just type 0)
ABC Company , a holder of P1,000,000 XYZ Company bonds, collected the interest due on March 31, year 1, and then sold the bonds to W, Inc. for P975,000. On that date, XYZ, a 75% owner of W had P1,075,000 carrying amount for the bonds. What was the effect of W's purchase of XYZ's bond on the noncontrolling interest amount reported in XYZ's March 31, year 1 consolidated balance sheet?
ABC Company , a holder of P1,000,000 XYZ Company bonds, collected the interest due on March 31, year 1, and then sold the bonds to W, Inc. for P975,000. On that date, XYZ, a 75% owner of W had P1,075,000 carrying amount for the bonds. What was the effect of W's purchase of XYZ's bond on the retained earnings amount reported in XYZ's March 31, year 1 consolidated balance sheet? (Answer format: amount increase/decrease e.g. 10000 decrease, if no effect, just type 0) What was the effect of W's purchase of XYZ's bond on the noncontrolling interest amount reported in XYZ's March 31, year 1 consolidated balance sheet? (Answer format: amount increase/decrease e.g. 10000 decrease, if no effect, just type 0) * Pls answer in good acctg form. Ty!
On January 1 of the current year, Andy Co. paid $575,000 to purchase two-year, 8%, $625,000 face value bonds that were issued by another publicly traded corporation. Andy Co. plans to sell the bonds before the first quarter of the following year. The fair value of the bonds at the end of the current year was $660,000. At what amount should Andy Co. report the bonds in its balance sheet at the end of the current year?
Seal Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Seal has a P2,500,000 note payable to United Bank. The bank accepted an equity interest in Seal Company in the form of 200,000 ordinary shares quoted at P12 per share. The par value is P10 per share. The fair value of the note payable on the date of restructuring is P2,200,000. What amount should be recognized as share premium from the issuance of the shares? a. 500,000 b. 100,000 c. 400,000 d. 200,000
On July 1, 2023, Tien Limited called its 9% convertible bonds for conversion. The $10 million of par value bonds were converted into 1 million common shares. On July 1, there was $75,000 of unamortized discount applicable to the bonds, and the company paid an additional $65,000 to the bondholders to induce conversion of all the bonds. At the time of conversion, the balance in the account Contributed Surplus—Conversion Rights was $270,000, and the bond’s fair value (ignoring the conversion feature) was $9,955,000. The company records conversion using the book value method. Prepare the journal entries if Tien prepares its financial statements using IFRS and if it uses ASPE. Can someone please explain what the difference is between IFRS and ASPE and how they got the number in the journal entries, thanks! Please donot provide solution in image format provide solution in step by step format and fast solution
Barbie originally issued 5,000,000 face value bonds at 105 or a premium of 250,000. Subsequently, the entity reacquired 1, 000,000 face value bonds to be placed in the treasury at 103. At the time of the reacquisition, the unamortized premium balance is 200,000, and accrued interest on the treasury bonds is 30,000 which is paid in cash. How much should be the book value of the bonds after the reacquisition of the bonds as treasury?
Katipunan Company has financial liability (accounted under amortized cost) with face amount of P5,000,000 and a carrying amount of P4,800,000. In addition, there is an unpaid interest of P250,000, accrued. The creditor agreed to the settlement of the bonds payable in exchange for 50,000 shares of P50 par value. The shares have current market value of P4,500,000. How much should be recorded as additional share premium as a result of the extinguishment of the liability?

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