Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter 9.M, Problem M.4.5P
To determine
Hedging:
Hedging against an investment risk is termed for strategically implementing the instruments and tools in the market to minimize the risk and effects of any adverse price movements. It can be said that investors are benefitted through hedging as they hedge one investment by making another investment.
The financial instruments like exchange traded funds, stocks, forward contracts, options, insurance, swaps, etc may construct hedge.
To calculate:
Value of interest rate swap associated with the note receivable.
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2. On January 1. 2015, Saved by Grace Corporation issued a three-year, non- interest bearing note with face value of P3,000,000 for a piece of land purchased from Not by Works Corporation. The note is payable in annual installments of P1,000,000 every December 31, starting on December 31, 2015. The land has an equivalent cash price of P2,400,000, a price that provides the note effective interest rate of 12%.
How much of the Notes payable, net of discount, should be reported as part of current liabilities on December 31, 2015 statement of financial position? _____
PROBLEM 8: On December 31, 2015, Park Bo Gum Co. sold used equipment with a carrying amount of P2,000,000 in exchange for a noninterest-bearing note of P5,000,000 requiring ten annual payments of P500,000. The first payment was made on December 31, 2016.
The market interest for a similar note was 12%. The present value of an ordinary annuity at 12% is 5.65 for ten periods and 5.33 for nine periods.
What is the carrying amount of the note receivable on December 31, 2015?
P5,000,000
P2,285,000.
P2,665,000
P4,500,000
What is the gain on the sale of equipment to be recognized in 2015?
P3,000,000
P2,175,000
P825,000.
Nil
What amount should be recognized as interest income for 2016?
P600,000
P339,000.
P319,800
P300,000
What is the carrying amount of the note receivable on December 31, 2016?
P2,664,000.
P4,500,000
P2,825,000
P2,325,000
PROBLEM 9: Paasa Co. sold machinery to Hoping Co. on January 1, 2015, for which the cash selling price was P7,582,000. Hopin entered into…
22. A company purchased land by signing a note with the seller, requiring down payment of P100,000, payment of P120,000 one year from purchase, and P80,000 three years from purchase. The note is non-interest bearing, but the going rate of similar notes is 10%. Present value of 1 at 10% for 1 period is 0.91. Present value of 1 at 10% for 3 periods is 0.75.
Chapter 9 Solutions
Advanced Accounting
Ch. 9.M - Prob. 1UTICh. 9.M - Prob. 2UTICh. 9.M - Prob. 3UTICh. 9.M - Prob. 4UTICh. 9.M - Prob. 5UTICh. 9.M - Prob. 1ECh. 9.M - Prob. 2ECh. 9.M - Prob. 3ECh. 9.M - Prob. 4.1ECh. 9.M - Prob. 4.2E
Ch. 9.M - Prob. 4.3ECh. 9.M - Prob. 4.4ECh. 9.M - Prob. 4.5ECh. 9.M - Prob. 4.6ECh. 9.M - Prob. 5ECh. 9.M - Prob. 6.1ECh. 9.M - Prob. 6.2ECh. 9.M - Prob. 7ECh. 9.M - Prob. M.1.1PCh. 9.M - Prob. M.1.2PCh. 9.M - Prob. M.2.1PCh. 9.M - Prob. M.2.2PCh. 9.M - Prob. M.3PCh. 9.M - Prob. M.4.3PCh. 9.M - Prob. M.4.4PCh. 9.M - Prob. M.4.5PCh. 9.M - Prob. M.4.6PCh. 9.M - Prob. M.5PCh. 9.M - Prob. M.6PCh. 9.M - Prob. M.7.1PCh. 9.M - Prob. M.7.2PCh. 9.M - Prob. M.7.3PCh. 9 - Prob. 1UTICh. 9 - Prob. 2UTICh. 9 - Prob. 3UTICh. 9 - Prob. 1.1ECh. 9 - Prob. 1.2ECh. 9 - Exercise 2 (LO 3) The accounting issues associated...Ch. 9 - Prob. 3.1ECh. 9 - Prob. 3.2ECh. 9 - Prob. 3.3ECh. 9 - Prob. 4.1ECh. 9 - Prob. 4.2E
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