Marcus Company has reported a total financial liability of P15,000,000 in its accounting records as of December 31, 2019 which include the following: A P3,000,000 face value perpetual bond that pays 5% interest each year A P2,000,000 redeemable preference share that will be redeemed by Marcus at a future date. A P1,500,000 redeemable preference shares redeemable at the option of the holder A P75,000 written call option that allows the holder to purchase a fixed number of ordinary shares of Marcus Company for a fixed amount. What is the correct amount of financial liability that should be reported by Marcus Company in its December 31, 2019 statement of financial position?

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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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Marcus Company has reported a total financial liability of P15,000,000 in its accounting records as of December 31, 2019 which include the following:

A P3,000,000 face value perpetual bond that pays 5% interest each year
A P2,000,000 redeemable preference share that will be redeemed by Marcus at a future date.
A P1,500,000 redeemable preference shares redeemable at the option of the holder
A P75,000 written call option that allows the holder to purchase a fixed number of ordinary shares of Marcus Company for a fixed amount.

What is the correct amount of financial liability that should be reported by Marcus Company in its December 31, 2019 statement of financial position?

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