2. On December 31, 2012, Greendale Corporation is experiencing extreme financial pressure and is in default in meeting interest payments on its long-term note of P6,000,000 due on December 31, 2013. The interest rate is 10% payable every December 31. In an agreement with the creditor, Greendale Corporation obtained certain changes in the terms of the note as listed in the image below. What is Greendale Corporation's gain on debt restructuring? (Round off present value factors to four decimal places) * The accrued interest of P600,000 on December 31, 2012 is forgiven. The principal is reduced by P1,000,000. The new interest rate is 12%. • The new date of maturity is December 31, 2017. At the time of restructuring, the stated rate of interest of the original obligation prevailed in the market for similar notes.

2. On December 31, 2012, Greendale Corporation is experiencing extreme financial pressure and is in default in meeting interest payments on its long-term note of P6,000,000 due on December 31, 2013. The interest rate is 10% payable every December 31. In an agreement with the creditor, Greendale Corporation obtained certain changes in the terms of the note as listed in the image below. What is Greendale Corporation's gain on debt restructuring? (Round off present value factors to four decimal places) * The accrued interest of P600,000 on December 31, 2012 is forgiven. The principal is reduced by P1,000,000. The new interest rate is 12%. • The new date of maturity is December 31, 2017. At the time of restructuring, the stated rate of interest of the original obligation prevailed in the market for similar notes.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On December 31, 2012, Greendale Corporation is experiencing extreme financial pressure and is in default in meeting interest payments on its long-term note of P6,000,000 due on December 31, 2013. The interest rate is 10% payable every December 31. In an agreement with the creditor, Greendale Corporation obtained certain changes in the terms of the note as listed in the image below. What is Greendale Corporation’s gain on debt restructuring? (Round off present value factors to four decimal places) a. P 1,979,180 b. P 1,600,000 c. P 1,221,020 d. P 0
Grouper Inc. is a reliable, long-term customer of Monty Ltd. Due to unexpected costs of rapid expansion, Grouper was unable to pay its account balance when it became due on January 1, 2023. Monty agreed to accept a $225,000 non- interest bearing note that would be payable on December 31, 2026. This type of financing would typically have an interest rate of 12%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Use 1. PV.1 Tables, 2. a financial calculator, or 3. Excel functions to arrive at the amount to record the note receivable. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and round final answer to 0 decimal places, e.g. 8,971.) Your answer has been saved. See score details after the due date. Note receivable $ (b) eTextbook and Media (c) List of Accounts Your answer has been saved. See score details after the due date. Account Titles and Explanation Notes Receivable Prepare…
Grouper Inc. is a reliable, long-term customer of Monty Ltd. Due to unexpected costs of rapid expansion, Grouper was unable to pay its account balance when it became due on January 1, 2023. Monty agreed to accept a $225,000 non- interest bearing note that would be payable on December 31, 2026. This type of financing would typically have an interest rate of 12%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Use 1. PV.1 Tables, 2. a financial calculator, or 3. Excel functions to arrive at the amount to record the note receivable. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and round final answer to 0 decimal places, e.g. 8,971.) Your answer has been saved. See score details after the due date. Note receivable $ (b) eTextbook and Media (c) List of Accounts Your answer has been saved. See score details after the due date. Account Titles and Explanation Notes Receivable Prepare…
On December 31, 2014, JKL Bank granted P6,000,000 loan to a borrower with a 10% stated rate payable SEMI-ANNUALLY and maturing in 4 years. The loan was discounted at an interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. On December 31, 2016, the bank determined that the borrower would pay back only P1,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P6,000,000 loan. (Round off PV factor to 4 decimal places) 1. Cash paid to the borrower on December 31, 2014 2. Carrying amount of the loan at December 31, 2016 3. Interest income for the year 2016 4. Impairment loss to be recognized on December 31, 2016 5. Carrying amount of the loan at December 31, 2017
ABC Company, due to extreme financial difficulties has negotiated a restructuring of its 10%, P10,000,000 note payable due on December 31, 2021. The unpaid interest on the note on such date is P1,000,000. The creditor has agreed to reduce the face value to P8,000,000, forgive the unpaid interest, reduce interest rate to 8% and extend the due date three years from December 31, 2021. The present value of 1 at 10% for three periods is 0.75 and present value of an ordinary annuity of 1 at 10% for three periods is 2.49. What is the gain on extinguishment of debt to be recognized by ABC Company on December 21, 2021?
On December 31, 2020, Monty Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Monty Co. agreed to accept a $296,600 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 12%. Monty is much more creditworthy and has various lines of credit at 6%. Prepare the journal entry to record the transaction of December 31, 2020, for the Monty Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Debit Date Account Titles and Explanation Dec. 31, 2020 eTextbook and Media List of Accounts Assuming Monty Co's fiscal year-end is December 31, prepare the journal entry for December 31, 2021. (Round…
29. On January 1, 20x1, ABC Bank extended a P1,000,000 loan to XYZ. Principal is due on December 31, 20x5 but 10% interest is due annually starting December 31, 20x1. On December 31, 20x3, XYZ was delinquent and it was ascertained that the loan is credit-impaired. ABC assessed that interests accruing on the loan will not be collected however the principal is expected to be collected in two equal annual installments starting December 31, 20x4. The current rate on December 31, 20x3 is 14%. Impairment loss is (use 6-decimal present value factor) The correct answer is: 232,231
On December 31, 2020, Larkspur Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Larkspur Co. agreed to accept a $ 252,100 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Larkspur is much more creditworthy and has various lines of credit at 6%.Click here to view factor table. https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf
am. 113.
The prevailing market interest rate for similar instrument at the time of restructuring (December 31, 2019) is 12%. What is the impairment loss to be recognize din December 31, 2019? (Use four decimal places for the PV factor)
Blue Cells Can contain On December 31, 2017, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 face value note with $200,000 accrued interest payable to Bryan, Inc. The original market rate of interest on the note was 12.58613%. Bryan agrees to forgive the accrued interest, extend the maturity date (two years) to December 31, 2019, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,712,000 (using the original market rate). Do NOT add rows to the spreadsheet! Discount Cash Premium Interest payable Par Interest expense Discount on bond payable Yes Bonds payable No Loss on redemption Gain on redemptin Cash Interest payable Interest receivable Notes payable Gain on restructuring Loss on restructuring Discount on Note payable Premium on Note payable…