INTERMEDIATE ACCOUNTING (ACCT 3200A)
10th Edition
ISBN: 9781307660630
Author: SPICELAND
Publisher: MCG CUSTOM
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Chapter 12, Problem 12.28Q
To determine
Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.
Unrealized holding gains and losses: These are gains and losses which are unrealized and are the result of changes in cost and fair values of the investment for the period the investment is held.
Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.
To explain: The reporting of OTT impairment by Corporation H
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4.
Baguio Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Baguio company has a P2,000,000 note payable to First Bank. The bank is considering two alternatives.
1. Acceptance of land owned by Baguio company valued at P1,600,000 and carried at its historical cost of P1,120,000.
2. Acceptance of an equity interest in Baguio company in the form of 16,000 shares with fair value of P120 per share. The share capital has a par value of P100 per share.
Under the first alternative, what is the amount of gain/(loss) on extinguishment of debt?
Baguio Company is experiencing financial difficulty and is renegotiating debt restructuring with its creditor to relieve its financial distress. Baguio Company has a P5,000,000 note payable to First Bank. The bank is considering two alternatives:A. Acceptance of land owned by Baguio Company carried at historical cost of P2,800,000 and with a fair value of P3,000,000.B. Acceptance of an equity interest on Baguio Company in the form of 40,000 shares with a par value of P100 per share. The note payable has a current fair value of P5,500,000.
Due to adverse economic circumstances and poor management, Tagaytay Highlands Company has negotiated a restructuring of its 9% P6, 000,000 note payable to Second Bank due on January 1, 2021. There is no accrued interest on the note. The bank has reduced the principal obligation from P6, 000,000 to P5, 000,000 and extends the maturity to 3 years or on December 31, 2023. However, the new interest rate is 13% payable annually every December 31. The…
Chapter 12 Solutions
INTERMEDIATE ACCOUNTING (ACCT 3200A)
Ch. 12 - All investments in debt securities are classified...Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5QCh. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Under IFRS No. 9, which reporting categories are...Ch. 12 - Prob. 12.12QCh. 12 - Do U.S. GAAP and IFRS differ in the amount of...Ch. 12 - Under what circumstances is the equity method used...Ch. 12 - The equity method has been referred to as a...Ch. 12 - In the application of the equity method, how...Ch. 12 - Prob. 12.17QCh. 12 - Prob. 12.18QCh. 12 - Prob. 12.19QCh. 12 - How does IFRS differ from U.S. GAAP with respect...Ch. 12 - What is the effect of a company electing the fair...Ch. 12 - Define a financial instrument. Provide three...Ch. 12 - Some financial instruments are called derivatives....Ch. 12 - (Based on Appendix 12A) Northwest Carburetor...Ch. 12 - Prob. 12.25QCh. 12 - Prob. 12.26QCh. 12 - (Based on Appendix 12B) Reporting an investment at...Ch. 12 - Prob. 12.28QCh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.15PCh. 12 - Prob. 12.2DMPCh. 12 - Prob. 12.4DMPCh. 12 - Continuing Cases Target Case LO12-4, LO12-6...
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