On July 31, 2021, ABC Company borrowed from a bank via issuing a 13.2% note. Transaction costs of P45,000 related to the borrowing was paid. The note was irrevocably designated at fair value for measuring purposes. Analyzing the changes in the fair value at yearend, P50,000 was not attributable to credit risk.
On July 31, 2021, ABC Company borrowed from a bank via issuing a 13.2% note. Transaction costs of P45,000 related to the borrowing was paid. The note was irrevocably designated at fair value for measuring purposes. Analyzing the changes in the fair value at yearend, P50,000 was not attributable to credit risk.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 31, 2021, ABC Company borrowed from a bank via issuing a 13.2% note. Transaction costs of P45,000 related to the borrowing was paid. The note was irrevocably designated at fair value for measuring purposes. Analyzing the changes in the fair value at yearend, P50,000 was not attributable to credit risk.
The net effects of the note are the following: P264,500 loss for the 2021 Income Statement and P234,500 loss on the 2021 Statement of Comprehensive Income.
Questions:
1. How much is the interest expense for 2020?
2. How much is the face value of the note?
3. How much is the fair value of the note at yearend 2021?
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