Answer letter c Exercise 2On January 1, 20x1, an entity issues bonds with face amount of P8,000,000 for P8,600,000. Thebonds mature on December 31, 20x4 and pay annual interest of 11% every December 31. The entityincurs transaction costs of P81,645. The effective interest rate adjusted for transaction costs is 9%.Required:Compute for the initial carrying amount of the bondsCompute for net discount or net premium (including effect of bond issue cost) from theissuance on initial recognitionAre the periodic interest payments greater than or less than the periodic interest expenses?a.b.C.

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Exercise 2 On January 1, 20x1, an entity issues bonds with face amount of P8,000,000 for P8,600,000. The bonds mature on December 31, 20x4 and pay annual interest of 11% every December 31. The entity incurs transaction costs of P81,645. The effective interest rate adjusted for transaction costs is 9%. Required: a. Compute for the initial carrying amount of the bonds b. Compute for net discount or net premium (including effect of bond issue cost) from the issuance on initial recognition Are the periodic interest payments greater than or less than the periodic interest expenses? C.

Exercise 2 On January 1, 20x1, an entity issues bonds with face amount of P8,000,000 for P8,600,000. The bonds mature on December 31, 20x4 and pay annual interest of 11% every December 31. The entity incurs transaction costs of P81,645. The effective interest rate adjusted for transaction costs is 9%. Required: a. Compute for the initial carrying amount of the bonds b. Compute for net discount or net premium (including effect of bond issue cost) from the issuance on initial recognition Are the periodic interest payments greater than or less than the periodic interest expenses? C.

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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