Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter SA2, Problem SA2.1.1P
Problem SA2-1 Consolidate
Company and the VIE Company had the following balance sheet on December 31, 2015, the date control was achieved:
The Primary Company guaranteed the 5% bond payable issued by the VIE Company. The Primary Company also loaned the VIE Company $300,000 on a subordinated note at 10% annual interest.
The fair value of the VIE Company's equity is $170,000. Equipment, with a 5 year life has a value $50,000 greater than book value.
Prepare a determination and determination of excess schedule.
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Problem 11-13
On January 1, 2019, Carmona Company purchased 10% bonds in the face amount of P3,000,000.
The bonds mature on January 1, 2029 and were purchased for P3,405,000 to yield 8%. The entity used the
effective interest method of amortization and interest is payable annually every December 31.
The business model is to collect contractual cash flows composed of interest and principal.
On December 31, 2020 the entity changed the business model for this investment to realize fair value
changes.
On January 1, 2021, the fair value of the bonds was P2,845,000 at an effective rate of 11%.
11. What amount should be reported as interest income for 2020?
a. 337,740
b. 300,000
C 272,400
d. 270,192
3/4
12. What amount in profit or loss should be recognized in 2021 as a result of the reclassification?
a. 531,600
b. 502,292
C. 154,200
d.
13. What amount should be reported as interest income for 2021?
a. 300,000
b. 312,950
c. 267,807
d. 284,500
Measurement – IFRS 9 Financial InstrumentsStartUp Ltd. acquires corporate bonds in the amount of five million Euro on the capital market and intends to holds the financial instruments for five years until the liquidity is needed to invest in its infrastructure.Assume the financial instruments bear the character of debt instruments categorized in a • mixed business model• at fair value through other comprehensive incomePlease explain, how StartUp Ltd. needs to measure the financial instruments initially and in subsequent periods
Problem 9-19 (IFRS)
P600,000. As a result of a restructuring agreement on
1, 2021, the creditor agreed to the following concessions
January
a. Accrued interest of P600,000 is forgiven..
b. The new principal is P4,000,000.
c. The new interest rate is 6% payable every December a.
e. The entity paid P350,000 as an arrangement fee to
creditor.
The PV of 1 at 10% for 3 periods is 0.75 and the PV of
ordinary annuity of 1 at 10% for 3 periods is 2.49.
The market rate of interest for similar note is 14%. The Dy
of 1 at 14% for 3 periods is 0.67 and the PV of an ordinary
annuity of 1 at 14% for 3 periods is 2.32.
1. At what amount should the new note payable be initially
measured?
a. 3,597,600
b. 3,947,600
c. 3,236,800
d. 4,000,000
2. What amount of gain on extinguishment should be
recognized for 2021?
а. 3,363,200
b. 3,013,200
c. 2,652,400
d. 3,002,400
3. What amount should be reported as interest expense for
the 2021?
a. 453,152
b. 394,760
с. 359,760
d. 240,000
4. What is the carrying amount…
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