Problem 8-8 (AICPA Adapted) 1, 2022, Mason Company issued P8,000, 09, Toes siov ed tarm bonds dated October 1, 2021. dof The bonds were sold to yield 10% with total proceeds of P7,009 ,009 plus accrued interest. Interest is paid every April 1 and October |. What amount should be reported as: accrued interest payable o, December 31, 2022? a. 175,000 b. 160,000 c. 116,667 — d. 106,667 Solution 8-8 Answer b Accrued interest payable October | to December 31, 2022 (8,000,000 x 8% x 3/12) 160,000 The nominal interest of 8% is used in determining the accrued interest payable from the last interest date on October 1, 2022. Problem 8-9 (AICPA Adapted) On June 30,2072, Huff Co issued at 99, five thousand bond 8%, P1,000 face amount. age ae es ; reed gh underwriter to whom the entity r ihn bond liability? Lote seiby ct } 4,950,000 ———————) (AICPA Adapted) Carr Company issued at 104, fiv . y , five thousand bonds of \ ne pa The bonds were issued through an 9 whom the entity paid bond issue cost of P125,000. 5,200,000 5,000,000 200,000 (125,000) 5,075,000 s authorized to issue P5,000,000 of 6%, 10-year ly 1, 2022 with interest payments on June 30 and issued on November 1, 2022, the entity received 0 including accrued interest. as discount or premium on bonds payable? pees , 5,150,000 June 30 to November |, 2022 ha (100,000) 5,050,000 5,000,000 50,000Problem 8-12 (AICPA Adapted) On January 1, 2022, Ezekiel Company received the fair val, P1,077,200 for 12% bonds with face amount of P1,000,000, a bonds were sold to yield 10%. Interest ts payable semiannually ¢,,.° January 1 and July 1. ty The entity has elected the fair value option for measuring ¢, financial liability. e On December 31, 2022, the fair value of the bonds is determine, to be P1,064,600 due to market and interest factors. 1. What is the carrying amount of the bonds payable on January | 2022? =? a. 1,000,000 b. 1,077,200 c. 500,000 d. 538,600 2. What amount should be reported as interest expense for 2022” a. 120,000 b. 100,000 c. 107,720 d. 129,264 ofthe “eae as gain or loss from changeit | the bonds payable on Decem**penta 1, 2022 equal to fair value 1,077,200 120,000 1,077,200 1,064,600 12,600 e in fair value 2.2, allows the measurement of a financial ion, the bond payable is measured at fair and any change in fair value is recognized in e change is attributable to credit risk, the ‘other comprehensive income. discount or premium amortization no longer 4022 equaltofairvalue 1,064,600 the carrying amount of the bonds payable . fair value at every year-end. 123