Professional Documents
Culture Documents
NON-CURRENT LIABILITIES
PROBLEMS
Computations:
At 8%
Issue price = (1,000,000 x 0.6756) + (50,000 x 8.1109)
= 675,600 + 405,545 = 1,081,145
A B C D
Interest Interest Premium Bond
Date Paid Expense Amortization Carrying Value
06/30/07 1,081,145
12/31/07 50,000 43,246 6,754 1,074,391
06/30/08 50,000 42,976 7,024 1,067,367
12/31/08 50,000 42,695 7,035 1,060,332
A = Face value x 5%
B = Carrying value, beg of year x 4%
At 11%
Issue price = (1,000,000 x 0.5854) + (50,000 x 7.5376)
= 585,430 + 376,880 = 962,280
A B C D
Interest Interest Discount Bond
Date Paid Expense Amortization Carrying Value
06/30/07 962,280
12/31/07 50,000 52,925 2,925 965,205
06/30/08 50,000 53,086 3,086 968,291
12/31/08 50,000 53,256 3,256 971,547
(c)
03/01/07 Cash 4,281,152
Bonds Payable 4,000,000
Premium on Bonds Payable 281,152
2-4. (Onyx)
(a) Issue price of bonds with warrants (1,000,000 x 1.03) 1,030,000
Bond price without warrants
1,000,000 x 0.3220 322,000
100,000 x 5.6502 565,020 887,020
Value of share warrants 142,980
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Chapter 2 - Non-Current Liabilities
(c)
07/01/06 Cash 2,000,000
Discount on Bonds Payable 144,240
Bonds Payable 2,000,000
PIC Arising from Bond Conversion Privilege 144,240
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Chapter 2 - Non-Current Liabilities
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Chapter 2 - Non-Current Liabilities
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Chapter 2 - Non-Current Liabilities
(b) Carrying value of bonds on December 31, 2009 (see table) 11,849,27
2
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Chapter 2 - Non-Current Liabilities
(c)
12/31/07 Cash 9,069,936
Discount on Bonds Payable 930,064
Bonds Payable 10,000,000
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Chapter 2 - Non-Current Liabilities
(c)
01/01/07 Cash 8,687,544
Bonds Payable 8,000,000
Premium on Bonds Payable 687,544
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Chapter 2 - Non-Current Liabilities
(d)
09/01/07 Land 6,949,800
Discount on Notes Payable 2,050,200
Notes Payable 9,000,000
2-14. (JFC)
(a) 2007 2008 2009
6,949,800 x 9%= 625,482
625,482 x 4/12 208,494
625,482 x 8/12 416,988
6,949,800 x 1.09 = 7,575,282
7,575,282 x 9%= 681,775
681,775 x 4/12 227,258
681,775 x 8/12 454,517
7,575,282 x 1.09 = 8,253,057
8,253,057 x 9%= 743,135
743,135 x 4/12 _______ _______ 247,712
Totals 208,494 644,246 702,229
(d)
09/01/07 Land 6,949,800
Notes Payable 6,949,800
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Chapter 2 - Non-Current Liabilities
(c)
04/01/07 Equipment 2,591,760
Discount on Notes Payable 608,240
Notes Payable 3,200,000
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Chapter 2 - Non-Current Liabilities
(b)
04/01/07 Equipment 2,591,760
Notes Payable 2,591,760
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Chapter 2 - Non-Current Liabilities
2-17.
(a) (South Company
Notes Payable 900,000
Interest Payable 90,000
Cost of Sales 650,000
Inventory of Machine Parts 650,000
Sales 800,000
Gain on Debt Restructuring 190,000
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Chapter 2 - Non-Current Liabilities
as:
Notes Payable 3,000,000
Interest Payable 330,000
Premium on Restructured Notes Payable 111,024
Restructured Notes Payable 3,000,000
Gain on Debt Restructuring 218,976
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