LQ2 - Noncurrent Liabilities

10/2/22, 12:50 PM LQ2- Noncurrent Liabilities
LQ2- Noncurrent Liabilities Total points 28/35
(12:00-2:15PM)
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Untitled Section 0 of 0 points
Year and Section *
IA2-A
IA2-B
FIRST NAME *
BEJEA PAULEEN
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LAST NAME *
QUIA
Choose the right answer among the choices provided. God Bless!
The gain or loss on the retirement of bonds prior to maturity should be 1/1
Ignored
Recognized in P/L during the period of retirement
Amortized over the remaining term of the bond
Credited of debited to share premium
On April 1, 2019, Dream issued at 97 plus accrued interest 2,000 of its 10%, 1/1
P1,000 bonds. The bonds are dated January 1, 2019 and mature on
January 1, 2028. Interest is payable semi-annualy on January 1 and July 1.
From the bond issuance, Dream would receive net cash of
P1,990,000
P1,890,000
P1,940,000
P1,965,000
Other:
On December 31, 2015, Ethereal Company purchased a machines from 1/1

Helix Company in exchange for a noninterest bearing note requiring eight
payments of P200,000. The first payment was made on December 31. At
the date of issuance, the prevailing rate of interest for this type of note was
11%. The PV of an ordinary annuity of 1 at 11% for 8 periods is 5.146 and
the PV of an annuity of 1 in advance at 11% for 8 periods is 5.712. On
December 31, 2015, what is the carrying amount of the note payable?
942,400
1,142,400
1,046,200
1,029,200
Other:
Kris had P600,000 convertible 8% bonds payable outstanding on June 30, 1/1
2019. Each P1,000 bond was convertible to 10 ordinary shares of P50 par
value. On July 1, 2019, the interest was paid to bondholders and 250 of the
P1,000 bonds were converted into ordinary shares. The shares had a fair
value of P75 on the day of conversion. The unamortized premium on these
bonds were P12,000 at the date of conversion. When the bonds were
issued, the equity component that was recognized amounted to P105,000.
What is the net increase in the equity of the issuer due to the conversion?
P298,750
P245,000
P173,750
P255,000
Other:
Bonds bearing an interest rate of 8% were issued above their face value. 0/1
This implies that market rate of interest at date of issue is
Equal to 8%
lower than 8%
Higher than 8%
at the reporting date is higher than 8%
Other:
Correct answer
lower than 8%
On January 1, 2019, Kaitlyn bought machinery costing P3,000,000 with 1/1

accumulated depreciation of P1,100,000 in exchange of a 3-year, P900,000
non-interest bearing not payable due as follows: 12/31/2019-
P200,000; 12/31/2020-300,000; 12/31/2021-400,000.The prevailing rate of
interest for this type of note is 10%. How much is the carrying amount of
the payable on December 31, 2020?
P428,346
P438,016
P467,354
P363,637
Other:
On September 30, 2015, World Company borrowed P 1,000,000 on a 9% 1/1

note payable. The entity paid first of four quarterly payments of P 264,200
when due on December 31, 2015. On December 31, 2015, what amount
should be reported as note payable?
735,800
825,800
750,000
758,300
Other:
Under the effective interest method of amortizing bond premium on term 1/1
bonds,
Interest expense increases each period
Interest rate varies from period to period
Interest expense remains the same for each period
Interest expense decreases each period
Other:
On January 1, 2008, Goll Corp. issued 4,000 of its 10%, $1,000 bonds for 1/1
$4,160,000. These bonds were to mature on January 1, 2016 but were
callable at 101 any time after December 31, 2011. Interest was payable
semi-annually on July 1 and January 1. On July 1, 2013, Goll called all of
the bonds and retired them. Bond premium was amortized on a straight-
line basis. Before income taxes, Goll's gain or loss in 2013 on this early
extinguishment of debt was
48,000 gain.
40,000 loss
32,000 gain.
120,000 gain.
Other:
On January 1, 2018, Kourtney issued serial bonds with a face value of 1/1
P4,000,000 and a stated interest rate of 10% to be held to maturity. The
stated interest rate is payable annually on December 31. The bonds are
issued to have an effective yield price at 12%. The bonds mature at annual
installments of P1,000,000 every January 1 beginning January 1, 2019 and
every January 1 thereafter. What is the carrying amount of the bonds on
January 1, 2018?
P3,776,000
P3,876,000
P3,842,000
P3,914,000
Other:
Lee Shine Company reported on June 30, 2015 a 10% note payable in the 1/1
amount of P3,600,000. The note is dated October 1, 2014 and is payable in
three equal annual payments of P1,200,000 plus interest. The first interest
and principal payment was made on October 1, 2015. On June 30,
2016what amount should be reported as accrued interest payable?
180,000
60,000
90,000
270,000
Other:
Khloe issued P5,000,000 of 8%, 5-year bonds on January 1, 2019 with 0/1
interest payable on June 30 and December 31. The bonds were purchased
for P5,316,000 plus transaction cost of P108,000 at an effective rate of 7%.
On December 31, 2019, the bonds were quoted at 106. what is the carrying
amount of the bond on December 31, 2019?
5,000,000
P5,300,000
5,171,940
P5,174,560
Other:
Correct answer
5,171,940
On July 1, 2017, after recording interest and amortization, Hymn Company 0/1
converted P5,000,000 of its 12% convertible bonds into 60,000 shares of
P50 par value ordinary shares. On the conversion date the carrying amount
of the bonds was P6,000,000, the market value of the bonds was
P6,500,000, and Hymn’s ordinary shares was publicly trading at P150 per
share. Hymn paid P300,000 in connection with the conversion and other
stock issue costs. The equity component on issue date of the bonds was
P800,000. What is the share premium from issuance should Hymn record
as a result of the conversion?
3,500,000
2,700,000
3,000,000
2,000,000
Other:
Correct answer
3,500,000
The note payable amounting to P1,300,000 represents a loan granted from 1/1
a subsidiary. This is covered by a promissory note with interest at 15% per
annum dated November 1, 2019 outstanding 3 years after. What is the
accrued interest payable as of calendar year-end?
P32,500
P97,500
P16,250
P48,750
Other:
The market price of a bond issued at a premium is the present value of its 1/1
principal amount at its effective rate of interest
- PV of all future interest payments at ER
+ PV of all future interest payments at ER
+ the total amount of all future interest payments
+ PV of all future interest payments at SR
On July 1, 2019, Kimberly purchased machinery costing P12,000,000 with 1/1

accumulated depreciation of P9,000,000 in exchange for a 3-year, 3%
P4,000,000 notes payable. Principal is due on July 1, 2021 but interests are
due semi-annually every July 1 and Jan 1. The prevailing interest rate for
this type of note is 12%. How much is the interest expense in 2019?
P175,399
P94,147
P186,893
P98,210
Other:
On December 31, 2017, Armor Company issued P5,000,000 face value, 5- 1/1
year bonds at 109. Each P1,000 bond was issued with 10 non-detachable
stock warrants, each of which entitled the bondholder to purchase one
share of P100 par value common at P120. Immediately after the issuance,
the market value of each war-rant was P5. The stated interest rate on the
bonds is 11% payable annually every December 31. However, the prevailing
market rate of interest for similar bonds without the warrants is 12%. What
amount should Armor record as increase in stockholders’ equity as a result
of the bond issuance?
440,000
.0
250,000
620,000
Other:
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On January 1, 2019, True issued 10-year bonds with a face amount of P1M 1/1
and a stated interest rate of 8% payable annually on January 1. The bonds
were priced to yield 10%. The total issue price of the bond was:
P1,000,000
P965,800
P877,100
P980,000
Other:
On January 1, 2019, Jenner received P1,032,880 for P1,000,000 face 0/1

amount 12% bonds a price that yield 10%. Interest expend for the year
ended December 31, 2019 is
P123,946
P120,000
102,870
P103,288
Other:
Correct answer
P103,288
For a troubled debt restructuring involving only a modification of terms, 1/1

which of the following specified by the new terms would be compared to
the carrying amount of the debt to determine if the debtor should report a
gain on extinguishing of debt?
The present value of the new debt at the original interest rate
The total future cash payments
The amount of future cash payments designated as principal repayments.
The present value of the new debt at the modified interest rate
Other:
Storm has an outstanding 10%, P1M face value convertible bonds maturing1/1
on December 31, 2018 on which interest is paid June 30 and December 31.
The unamortized balance in the bond discount account was P30,000. The
paid in capital from bond conversion privilege had a balance of P50,000.
On that date, all of these bonds were converted into 40,000 ordinary shares
with P20 par value. At that time, each share of Storm sells for P23. Storm
incurred expenses of P10,000 in connection with the conversion. The
conversion of the bonds to ordinary shres shall result to a gain or loss of
P170,000
P160,000
P180,000
P210,000
Other:
Khloe issued P5,000,000 of 8%, 5-year bonds on January 1, 2019 with 1/1
interest payable on June 30 and December 31. The bonds were purchased
for P5,316,000 plus transaction cost of P108,000 at an effective rate of 7%.
On December 31, 2019, the bonds were quoted at 106. What amount of
interest expense should be reported for 2019?
P400,000
P364,560
P200,000
P363,940
Other:
Bruce has outstanding 7% 10 year P2,000,000 face value bond. The bond 1/1
was originally sold to yield 6% annual interest. On June 30, 2019, the
carrying amount of the outstanding bond was P2,100,000. What mount of
unamortized premium on bond should Bruce report in its June 30, 2020
statement of financial position?
P140,000
P126,000
114,000
P86,000
Other:
How should an entity calculate the net proceeds to be received from the 1/1
bond issuance?
Discount the bonds at the stated rate of interest and deduct bond issuance cost.
Discount the bonds at the market rate of interest.
Discount the bonds at the stated rate of interest.
Some Other Answer
Discount the bonds at the market rate of interest and deduct bond issuance
cost.
Bonds payable should be initially recognized at 1/1
Issue price – transaction cost
Issue price
serial bonds
Term bonds
Other:
Bonds mature on series of dates are called 0/1
Term Bonds
Debenture bonds
Callable bonds
Serial bonds
Other:
Correct answer
Serial bonds
On January 1, 2015, P Company borrowed P3,6000,000 from a major 1/1

customer evidenced by a noninterest bearing note due on three years. The
entity agreed to supply the customer’s inventory needs for the loan period
at lower than market price. At the 12% imputed interest rate for this type of
loan, the present value of the note is P2,550,000 on January 1, 2015. What
amount of interest expense should be reported in 2015?
350,000
306,000
432,000
Other:
An entity used the calendar year as its reporting period. When the interest 0/1
payment dates of an issued bonds are March 1 and Sept 1, and the bond is
issued on May 1, the amount of interest expense during the year of
issuance would be for
10 months
8 months
5 months
6 months
Other:
Correct answer
10 months
Issued convertible bonds are 1/1
Some Other Answer
Recorded at face value without consideration of a premium or discount
Separated into debt and equity components with the liability component
recorded at fair value and the residual assigned to the equity component
Always recorded using the fair value option
Recorded at face value for the liability along with the associated premium or
discount
Kylie has an overdue Notes Payable to Jenner with face amount of 1/1
P10,000,000 and accrued interest on December 31, 2019 of P1,000,000.
Because of financial difficulty, Jenner offered Kylie to settle the obligation
by issuing 150,000 shares of its ordinary share capital. The par value of
each share is P50 and the market value on this date is P65. Kylie accepted
the offer. What amount should Kylie include in its profit or loss statement
for the year 2019 as a result of the settlement of the obligation?
P3,500,000
P1,250,000
P2,500,000
P0
Other:
Use the same information above. How much of the notes payable, net of 0/1
discount, should be reported as part of current liabilities on December 31,
2019 statement of financial position?
P890,560
P1,000,000
P805,120
P797,440
Other:
Correct answer
P797,440
On January 1, 2019, Kardashian issued a 3-year non-interest bearing note 1/1

with face vale of P3,000,000 for a piece of land purchased from Jenner.
The note is payable in annual installments of P1,000,000 every December
31, starting December 31, 2019. The land has an equivalent cash price of
P2,400,000 a price that provides the note an effective interest rate of 12%.
What is the interest expense for the year ending December 31, 2019?
P360,000
P168,000
P288,000
P240,000
Other:
Use the same information above. What is the balance of the Discount on 1/1
Notes Payable at December 31, 2019?
P432,000
P360,000
P240,000
P312,000
Option 5
Other:
What is Kendall’s gain or loss on debt restructuring? 1/1
P2,426,220
P0
P2,640,000
P1,440,000
Other:
What amount of pre-tax gain on extinguishment of debt should be reported 1/1

as component of income from continuing operations?
500,000
200,000
300,000
Other:
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10/2/22, 12:50 PM LQ2- Noncurrent Liabilities

LQ2- Noncurrent Liabilities Total points 28/35

2. Fill out all required information CORRECTLY.

I know you studied, BELIEVE IN YOUR HARDWORK. 💪

The respondent's email (xt202001331@wmsu.edu.ph) was recorded on submission of this

Untitled Section 0 of 0 points

Year and Section *

Untitled Section 24 of 30 points

Recognized in P/L during the period of retirement

Amortized over the remaining term of the bond

Credited of debited to share premium

On December 31, 2015, Ethereal Company purchased a machines from 1/1

at the reporting date is higher than 8%

On January 1, 2019, Kaitlyn bought machinery costing P3,000,000 with 1/1

On September 30, 2015, World Company borrowed P 1,000,000 on a 9% 1/1

Interest expense increases each period

Interest rate varies from period to period

Interest expense remains the same for each period

Interest expense decreases each period

- PV of all future interest payments at ER

+ PV of all future interest payments at ER

+ the total amount of all future interest payments

+ PV of all future interest payments at SR

On July 1, 2019, Kimberly purchased machinery costing P12,000,000 with 1/1

On January 1, 2019, Jenner received P1,032,880 for P1,000,000 face 0/1

For a troubled debt restructuring involving only a modification of terms, 1/1

The total future cash payments

The amount of future cash payments designated as principal repayments.

Discount the bonds at the market rate of interest.

Discount the bonds at the stated rate of interest.

Some Other Answer

Bonds payable should be initially recognized at 1/1

Issue price – transaction cost

Bonds mature on series of dates are called 0/1

On January 1, 2015, P Company borrowed P3,6000,000 from a major 1/1

Issued convertible bonds are 1/1

Some Other Answer

Recorded at face value without consideration of a premium or discount

Always recorded using the fair value option

Untitled Section 2 of 3 points

On January 1, 2019, Kardashian issued a 3-year non-interest bearing note 1/1

Untitled Section 1 of 1 points

What is Kendall’s gain or loss on debt restructuring? 1/1

Untitled Section 1 of 1 points

What amount of pre-tax gain on extinguishment of debt should be reported 1/1

This form was created inside of Western Mindanao State University.

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