Chapter - Non-Current Liabilities CHAPTER NON-CURRENT LIABILITIES PROBLEMS 2-1 (Ruby Corporation) At 8% Bond issue price Nominal interest for 2009 Interest expense for 2009 Premium/discount amortization in 2009 Bond carrying value at December 31, 2009 Nominal interest for 2010 Interest expense for 2010 Premium/discount amortization in 2010 Bond carrying value at December 31, 2010 At 11% 1,081,145 50,000 43,246 6,754 962,280 50,000 52,925 2,925 1,074,391 965,205 100,000 85,671 14,059 100,000 106,342 6,342 1,060,332 971,547 Computations: At 8% Issue price = (1,000,000 x 0.6756) + (50,000 x 8.1109) = 675,600 + 405,545 = 1,081,145 Date A Interest Paid B Interest Expense C Premium Amortization 06/30/09 12/31/09 06/30/10 12/31/10 50,000 50,000 50,000 43,246 42,976 42,695 6,754 7,024 7,035 A B = = D Bond Carrying Value 1,081,145 1,074,391 1,067,367 1,060,332 Face value x 5% 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 2-2 Date A Interest Paid B Interest Expense C Discount Amortization 06/30/09 12/31/09 06/30/10 12/31/10 50,000 50,000 50,000 52,925 53,086 53,256 2,925 3,086 3,256 (Fire Company) D Bond Carrying Value 962,280 965,205 968,291 971,547 Chapter - Non-Current Liabilities (a) (b) Issue price Present value of face value (4,000,000 x 0.5083) Present value of interest payments (320,000 x 7.0236) Issue price P2,033, 200 2,247,552 P4,280,75 Amortization Table Date 3/01/09 8/31/09 2/28/10 8/31/10 2/28/11 (c) 03/01/09 Interes t Paid 320,00 320,00 320,00 320,00 Interest Expense 299,653 Premium Amortization 20,347 Bond Carrying Value 4,280,752 4,260,405 298,228 21,772 4,238,633 296,704 23,296 4,215,337 295,074 24,926 4,190,411 Cash 4,281,15 Bonds Payable Premium on Bonds Payable 08/31/09 12/31/09 2/28/10 8/31/10 12/31/10 2/28/11 Interest Expense Premium on Bonds Payable Cash 299,653 20,347 Interest Expense (298,228 x 4/6) Premium on Bonds Payable Interest Payable (320,000 x 4/6) 198,819 14,514 Interest Expense Premium on Bonds Payable Interest Payable Cash 99,409 7,258 213,333 Interest Expense Premium on Bonds Payable Cash 296,704 23,296 Interest Expense (295,074 x 4/6) Premium on Bonds Payable Interest Payable 196,716 16,617 Interest Expense Premium on Bonds Payable Interest Payable Cash 99,025 7,642 213,333 10 4,000,00 280,752 320,000 213,333 320,000 320,000 213,333 320,000 Chapter - Non-Current Liabilities 2-3 (Metal Corporation) Market value of bonds Market value of warrants Total issue price (a) 5,000,000 x 98 5,000 x 70 Cash Discount on Bonds Payable Bonds Payable 4,900,000 350,000 5,250,000 5,250,00 100,000 5,000,00 350,000 Share Warrants Outstanding (b) Cash (5,000 x 20 x 20) Share Warrants Outstanding Ordinary Shares (5,000 x 20 x 15) 2,000,00 350,000 Share Premium 2-4 (Onyx) (a) Issue price of bonds with warrants (1,000,000 x 1.03) Bond price without warrants 1,000,000 x 0.3220 100,000 x 5.6502 Value of share warrants (b) Interest Expense for 2009 (887,020 x 12% x 10/12 (c) Bond carrying value, March 1, 2009 Amortization through December 31, 2009 887,020 x 12% x 10/12 1,000,000 x 12% x 10/12 Bond carrying value, December 31, 2009 (d) Cash (1,000 x 30 x 50) Share Warrants Outstanding Ordinary Share (30,000 x 25) Share Premium 2-5 322,000 565,020 88,702 83,333 1,500,00 142,980 Issue price of bonds without conversion privilege 2,000,000 x 0.5674 1,134,800 200,000 x 3.6048 720,960 11 1,030,00 887,020 142,980 88,702 887,020 (Celeron Company) (a) Issue price of convertible bonds Allocation to equity 1,500,00 850,000 5,369 892,389 750,000 892,980 2,000,00 1,855,76 144,240 Chapter - Non-Current Liabilities (b) Amortization Table Date Interest Paid 07/01/09 06/30/10 200,000 06/30/11 200,000 06/30/11 06/30/11 06/30/12 80,000 06/30/13 80,000 06/30/14 80,000 *Adjusted; difference is due to (c) 07/01/09 Interest Expense Discount Amortization 222,691 225,414 22,691 25,414 91,386 92,752 94,316* rounding off 11,386 12,752 14,316 Cash Discount on Bonds Payable Bonds Payable 2,000,00 144,240 2,000,00 144,240 PIC Arising from Bond Conversion Privilege 06/30/10 Interest Expense Discount on Bonds Payable Cash 222,691 06/30/11 Interest Expense Discount on Bonds Payable Cash 225,414 06/30/11 Bonds Payable PIC Arising from Conversion Privilege Discount on Bonds Payable Ordinary Share Share Premium 22,691 200,000 57,681 960,000 268,863 Face value of bonds converted Discount on bonds payable cancelled Value of equity converted (144,240 x 120/200) Par value of ordinary shares issued (120 x 80 x 100) Interest Expense Discount on Bonds Payable Cash 12 25,414 200,000 1,200,00 86,544 Carrying value,bonds converted (1,903,865 x 120/200 06/30/12 Bond Carrying Value 1,855,760 1,878,451 1,903,865 (1,142,319) 761,546 772,932 785,684 800,000 91,386 1,142,31 1,200,00 57,681 86,544 960,000 11,386 80,000 Chapter - Non-Current Liabilities 06/30/13 Interest Expense Discount on Bonds Payable Cash 92,752 06/30/14 Interest Expense Discount on Bonds Payable Cash 94,316 06/30/14 Bonds Payable 800,000 57,69 PIC Arising from Bond Conversion Privilege Cash PIC from Unexercised Bond Conversion Privilege (144,240 – 86,544) 2-6 12,752 80,000 14,316 80,000 800,000 57,696 (Iron Company) Bonds Payable Premium on Bonds Payable (450,000 x 2/20) 2,000,000 45,000 PIC Arising from Bond Conversion Privilege(320,000 x 32,000 2/20) Ordinary Shares (1,000 x 60 x 20) Share Premium 2-7 1,200,000 877,000 (Lim Corporation) (a) Cash 5,500,00 Bonds Payable 5,000,00 200,000 300,000 Premium on Bonds Payable PIC Arising from Bond Conversion Privilege (b) Bonds Payable Premium on Bonds Payable (5,000 x 1/5) PIC Arising Privilege from Bond 1,000,00 10,000 Conversion 60,000 Ordinary Share (200 x 40 x 100) Share Premium 300,000 x 1/5 = 60,000 (c) Bonds Payable Premium on Bonds Payable (5,000 x 2/5) PIC Arising Privilege from Bond Conversion 800,000 270,000 2,000,00 20,000 120,000 Cash (2,000,000 x 1.04) Gain on Retirement of Bonds PIC from Unexercised Bond Conversion Privilege 13 2,080,00 10,000 50,000 Chapter - Non-Current Liabilities Retirement price 2,080,00 Retirement price on account of liability 2,000,000 x 1.005 2,010,00 70,000 Retirement price on account of equity Carrying value of bonds retired Face value Unamortized premium (50,000 x 2/5) 2,000,00 _20,000 Retirement price of bonds (2M x 1.005) Gain on retirement of bonds 2,020,00 2,010,00 10,000 Carrying value of equity 120,000 Retirement price on account of 70,000 Gain on cancellation taken to 50,000 cancelled equity equity 2-8 (Emerald Corporation) The following table may facilitate the computations required in this problem Date 12/01/09 06/01/10 12/01/10 06/01/11 12/01/11 06/01/12 12/01/12 06/01/13 12/01/13 06/01/14 12/01/14 Interes t Paid 300,00 300,00 300,00 300,00 300,00 180,00 180,00 180,00 180,00 180,00 Interest Expense 269,304 Premium Amortization 30,696 Bond Carrying Value 5,386,072 5,355,376 267,769 32,231 5,323,145 266,157 33,843 5,289,302 264,465 35,535 5,253,767 262,688 37,312 5,216,455 156,494 23,506 3,106,367 155,318 24,682 3,081,685 154,084 25,916 3,055,769 152,788 27,212 3,028,557 151,443* 28,557 3,000,000 *Adjusted; difference is due to rounding off (a) Carrying value, December 1, 2006 (see, table) 14 5,323,14 Chapter - Non-Current Liabilities Amortization for one month (33,843 x 1/6) Carrying value, December 31, 2010 5,640 5,317,50 (b) Interest Expense for year 2010 January 1-June 1, 2010 (269,304 x 5/6) June 1-December 1, 2010 December 1-31, 2010 (266,157 x 1/6) Total (c) Carrying value of bonds retired on December 1, 2011 224,420 267,769 _44,360 536,549 5,253,767 x 2/5 2,101,50 9,950 Amortization through April 1, 2012 (37,312 x 4/6 x 2/5) (d) Carrying value of bonds retired on April 1, 2012 2,091,55 Carrying value of bonds retired 2,091,55 2,080,00 11,557 Redemption price (2,000,000 x 1.04) Gain on redemption of bonds (e) (f) Carrying value of remaining bonds, December 1, 2011 Amortization through December 31, 2011 (24,682 x 1/6) Carrying value of remaining bonds, December 31, 2011 On bonds redeemed: January 1-June 1, 2012 (262,688 x 3/5 x 5/6) June 1-December 1, 2012 December 1-31, 2012 (155,318 x 1/6) January 1-June 1, 2013 (155,318 x 5/6) June 1-December 1, 2013 December 1-31, 2013 (152,788 x 1/6) Interest Expense 2-9 (Ohio Company) Date 01/01/09 12/31/09 12/31/10 12/31/11 12/31/12 4,114 3,102,253 2012 52,538 January 1-April 1, 2012 (262,688 x 2/5 x 3/6) On remaining bonds 3,106,367 203 131,344 156,494 25,886 366,262 129,432 154,084 25,465 308,981 Partial Amortization Table Interest Paid 1,200,00 1,200,00 1,200,00 1,200,00 Interest Expense 1,014,73 999,90 983,90 966,61 15 Premium Amortization 185,270 Bond Carrying Value 12,684,120 12,498,850 200,092 12,298,758 216,099 12,082,659 233,387 11,849,272 Chapter - Non-Current Liabilities 12/31/13 600,00 600,00 12/31/14 473,97 463,88 126,029 5,798,607 136,111 5,662,496 (a) Effective interest (12,734,120 – 50,000) x 8% Nominal interest (10,000,000 x 12% Amortization of premium for 2009 1,014,730 1,200,000 185,270 (b) Carrying value of bonds on December 31, 2012 (see table) 11,849,27 (c) Carrying value of bonds called (11,849,272 x 5/10) Call price/retirement price (5,000,000 x 110%) Gain on retirement of bonds 5,924,636 (d) Interest Expense for year 2014 (see table) (e) Unamortized premium on bonds payable, Dec 31, 2014 463,889 5,662,496 – 5,000,000 2-10 (Sim Company) Date 03/01/09 09/01/09 03/01/10 09/01/10 03/01/11 09/01/11 03/01/12 09/01/12 (a) (b) 662,496 Partial Amortization Table Nominal Interest Effective Interest Premium Amortization 85,000 85,000 85,000 85,000 85,000 85,000 85,000 88,335 88,485 88,642 88,806 88,977 89,156 89,343 3,335 3,485 3,642 3,806 3,977 4,156 4,343 Bond Carrying value P1,963,000 1,966,335 1,969,820 1,973,462 1,977,268 1,981,245 1,985,401 1,989,744 Interest expense recorded on September 1, 2009 Discount amortization recorded on September 1, 2009 Carrying amount of the bonds, September 1, 2009 Amortization through December 31, 2009 (3,485 x 4/6) (c) 88,335 3,335 1,966,33 2,323 Carrying amount of the bonds, December 31, 2009 1,968,65 Retirement price (at face value) 2,000,00 56,667 2,056,66 Accrued interest (2,000,000 x 8.5% x 4/12) Amount of cash paid on June 30, 2012 (d) 5,050,000 874,636 Carrying value, March 1, 2012 (see table) Amortization through June 30, 2012 (4,343 x 16 1,985,40 2,895 Chapter - Non-Current Liabilities 4/6) Carrying value, June 30, 2012 1,988,29 2,000,00 11,704 Retirement price (at face value) Loss on retirement of bonds 2-11 (Lim Company) (a) Issue price of the bonds Principal Interest Due Date Due Due 12/31/10 2,000,00 12/31/11 2,000,00 12/31/12 2,000,00 12/31/13 2,000,00 12/31/14 2,000,00 Selling price of bonds Amount Due Present Value 800,000 2,800,000 PV Factor 0.8929 640,000 2,640,000 0.7972 2,104,608 480,000 2,480,000 0.7118 1,765,264 320,000 2,320,000 0.6355 1,474,360 160,000 2,160,000 0.5674 1,225,584 2,500,120 P9,069,936 (b) Principal Due Due Date Amortization Table Interest Effective Discount Due Interest Amortizatio n Carrying Value, end 12/31/09 12/31/10 2,000,00 12/31/11 2,000,00 12/31/12 2,000,00 12/31/13 2,000,00 12/31/14 2,000,00 *Adjusted; difference is due 800,000 1,088,392 288,392 P9,069,93 7,358,328 640,000 882,999 242,999 5,601,327 480,000 672,159 192,159 3,793,486 320,000 455,218 135,218 1,928,704 160,000 231,296 71,296* -0- to rounding off (c) 12/31/09 Cash Discount on Bonds Payable Bonds Payable 12/31/10 Interest Expense Discount on Bonds Payable Cash Bonds Payable 9,069,93 930,064 1,088,39 2,000,00 17 10,000,00 288,392 800,000 Chapter - Non-Current Liabilities Cash 12/31/11 2,000,000 Interest Expense Discount on Bonds Payable Cash Bonds Payable 2,000,00 Cash 2-12 (Blue Sapphire Corporation) (a) Issue price of the bonds Principal Due Interest Due Amount Due 2,000,00 12/31/10 2,000,00 12/31/11 2,000,00 12/31/12 2,000,00 Selling price of bonds 960,000 Due Date 12/31/09 882,999 242,999 640,000 2,000,000 Present Value 2,960,000 PV Factor 0.9259 2,740,664 720,000 2,720,000 0.8573 2,331,856 480,000 2,480,000 0.7938 1,968,624 240,000 2,240,000 0.7355 1,646,400 P8,687,544 (b) Principal Due Due Date Amortization Table Interest Effectiv Discount Due e Amortizatio Interest n 01/01/09 12/31/09 2,000,00 960,000 695,004 12/31/10 2,000,00 720,000 513,804 12/31/11 2,000,00 480,000 337,308 12/31/12 2,000,00 240,000 166,340 * *Adjusted; difference is due to rounding off Carrying Value, end 264,996 8,687,544 6,422,548 206,196 4,216,352 142,692 2,073,660 73,660 -0- (c) 01/01/09 Cash 8,687,54 Bonds Payable Premium on Bonds Payable 12/31/09 Interest Expense Premium on Bonds Payable Cash Bonds Payable 12/31/10 695,004 264,996 960,000 2,000,00 Cash Interest Expense Premium on Bonds Payable 18 8,000,00 687,544 513,804 206,196 2,000,00 Chapter - Non-Current Liabilities Cash 720,000 Bonds Payable 2,000,00 Cash 2,000,00 2-13 (KFC Delivery Service) (a) 6,949,800/9,000,000 = 0.7722 This present value factor for three periods is under the rate of 9% (Table II, Present Value of a Single Payment) Hence, effective yield for this transaction is 9% (b) Date 09/01/09 08/31/10 08/31/11 08/31/12 Amortization 9% x 6,949,800 = 625,482 9% x 7,575,282 = 681,775 9% x 8,257,057 = 742,943* *Adjusted; difference is due to rounding off (c) Carrying Value of Note 6,949,800 7,575,282 8,257,057 9,000,000 Interest expense for 2009 (625,482 x 4/12) 208,494 Carrying value, September 1, 2009 6,949,80 280,494 7,158,29 Amortization through December 31, 2009 Carrying value, December 31, 2009 (d) 09/01/09 Land 6,949,80 2,050,20 Discount on Notes Payable Notes Payable 9,000,00 12/31/09 Interest Expense Discount on Notes Payable 208,494 09/01/10 Interest Expense (625,482 -208,494) Discount on Notes Payable 416,988 12/31/10 Interest Expense (681,775 x 4/12) Discount on Notes Payable 227,258 09/01/11 Interest Expense (681,775 227,258) Discount on Notes Payable 12/31/11 09/01/12 – 19 416,988 227,258 454,517 454,517 Interest Expense (742,943 x 4/12) Discount on Notes Payable Interest Expense (742,943 247,648) Discount on Notes Payable 208,494 247,648 247,648 – 495,295 495,295 Chapter - Non-Current Liabilities 2-14 (JFC) (a) 2009 6,949,800 x 9%= 625,482 625,482 x 4/12 625,482 x 8/12 6,949,800 x 1.09 = 7,575,282 7,575,282 x 9%= 681,775 681,775 x 4/12 681,775 x 8/12 7,575,282 x 1.09 = 8,253,057 8,257,057 x 9%= 743,135 743,135 x 4/12 Totals 2010 2011 208,494 416,988 227,258 454,517 _ 208,494 _ 644,246 247,712 702,229 (b) Notes Payable Accrued interest (208,494 + 644,246) Total, December 31, 2010 6,949,800 852,740 7,802,540 (c) Non-current Liabilities Notes Payable Accrued interest (208,494 + 644,246) December 31, 2010 6,949,800 852,740 7,802,540 Current Liabilities Accrued interest Total, December 31, 2011 6,949,800 1,554,969 8,504,769 (d) 09/01/09 Land 6,949,80 Notes Payable 6,949,80 12/31/09 Interest Expense Interest Payable 208,494 12/31/10 Interest Expense Interest Payable 644,246 12/31/11 Interest Expense Interest Payable 702,229 8/31/12 208,494 644,246 702,229 Interest Expense (adjusted) Interest Payable Notes Payable 495,231 1,554,96 6,949,80 Cash 9,000,00 2-15 (Wendy’s Catering Service) (a) Present value of note (800,000 x 3.2397) 2,591,760 (b) Date Principal Due Carrying Value of Note 4/01/09 20 Amortization 2,591,760 Chapter - Non-Current Liabilities 3/31/10 3/31/11 3/31/12 3/31/13 800,000 800,000 800,000 800,000 233,258 182,252 126,654 66,076* 2,025,018 1,407,270 733,924 -0- *Adjusted; difference is due to rounding off (c) 04/01/09 Equipment 2,591,76 608,240 Discount on Notes Payable Notes Payable 12/31/09 Interest Expense (233,258 x 9/12) Discount on Notes Payable 174,944 Notes Payable Interest Expense Cash 800,000 58,314 12/31/10 Interest Expense (182,252 x 9/12) Discount on Notes Payable 136,689 03/31/11 Notes Payable Interest Expense Cash 800,000 45,563 03/31/10 174,944 Discount on Notes Payable (233,258174,944) 03/31/12 Interest Expense (126,654 x 9/12) Discount on Notes Payable 94,991 800,000 31,663 Discount on Notes Payable (126,65494,991) Interest Expense (66,076 x 9/12) Discount on Notes Payable 03/31/13 Notes Payable Interest Expense Cash 49,557 2-16 (Burgee’s Food Corporation) (a) 04/01/09 03/31/10 03/31/11 800,000 31,663 49,557 800,000 16,519 Discount on Notes Payable (66,07649,557) Date 136,689 94,991 Notes Payable Interest Expense Cash 12/31/12 800,000 58,314 800,000 45,563 Discount on Notes Payable (182,252136,689) 12/31/11 3,200,00 800,000 16,519 Annual Payment Interest Principal Payment Carrying Value 800,000 800,000 233,258 182,252 566,742 617,748 2,591,760 2,025,018 1,407,270 21 Chapter - Non-Current Liabilities 03/31/12 03/31/13 800,000 800,000 126,654 66,053 673,346 733,947* *Adjusted (b) 04/01/09 Equipment 2,591,76 Notes Payable 12/31/09 04/01/10 12/31/10 04/01/11 12/31/11 04/01/12 12/31/12 04/01/13 (c) 733,924 -0- Interest Expense (233,258 x 9/12) Interest Payable 174,944 Interest Payable Interest Expense (233,258 – 174,944) Notes Payable Cash 174,944 58,314 566,748 Interest Expense (182,252 x 9/12) Interest Payable 136,689 Interest Payable Interest Expense (182,252 – 136,689) Notes Payable Cash 136,689 45,563 617,748 174,944 800,000 94,991 94,991 Interest Payable Interest Expense (126,654 – 94,991) Notes Payable Cash Interest Expense (66,053 x 9/12) Interest Payable 94,991 31,663 673,346 800,000 49,540 49,540 Interest Payable Interest Expense (66,053 – 49,540) Notes Payable Cash December 800,000 136,689 Interest Expense (126,654 x 9/12) Interest Payable Current portion at 2010 Notes Payable Interest Payable 49,540 16,513 733,947 800,000 31, 617,748 136,689 Noncurrent portion at December 31, 2010 Notes Payable 1,407,27 2-17 (a) (South Company Notes Payable Interest Payable Cost of Sales Inventory of Machine Parts Sales 22 2,591,76 900,000 90,000 650,000 650,000 800,000 Chapter - Non-Current Liabilities Gain on Debt Restructuring (b) 190,000 (Jay Company) Bonds Payable 10,000,00 900,000 Interest Payable Ordinary Share 7,500,00 3,400,00 Share Premium (c) (Capshell Company) Notes Payable 10,000,00 1,200,000 Interest Payable Restructured Notes Payable 7,459,26 3,740,73 Gain on Debt Restructuring Present value of future payments 8,000,000 x 0.7972 = 6,377,600 8,000,000 x 8% x 1.6901 = 1,081,664 Total 7,459,264 Carrying value of liability 11,200,000 Gain on debt restructuring 3,740,736 Alternatively, the recorded as: Notes Payable entry may be Interest Payable Discount on Restructured Notes Payable Restructured Notes Payable 10,000,00 1,200,000 540,736 8,000,00 3,740,73 Gain on Debt Restructuring (d) (Solid Company) Notes Payable Interest Payable Restructured Notes Payable 3,000,000 330,000 Gain on Debt Restructuring Present value of future payments 3,000,000 x 0.5935 = 1,780,500 3,000,000 x 12% x 3.6959 = 1,330,524 Total 3,111,024 Carrying value of liability 3,330,000 Gain on debt restructuring 218,976 Alternatively, the entry may be recorded 23 3,111,02 218,976 Chapter - Non-Current Liabilities as: Notes Payable Interest Payable Premium on Restructured Notes Payable Restructured Notes Payable Gain on Debt Restructuring Theory MC1 MC2 MC3 MC4 MC5 MC6 MC7 MC8 MC9 MC10 3,000,000 330,000 111,024 3,000,00 218,976 MULTIPLE CHOICE QUESTIONS D D D C D D D C D C MC11 MC12 MC13 MC14 MC15 MC16 MC17 MC18 MC19 MC20 C B B D A A D B A C Problems MC21 MC22 MC23 MC24 MC25 MC26 MC27 MC28 D B A B B C A D MC29 MC30 MC31 MC32 MC33 D C A A B MC34 MC35 C A MC36 MC37 C D MC38 MC39 B D MC40 MC41 MC42 B C MC43 (1,000,000 x 0.38554) + (80,000 x 6.14457) = 877,106 (1,000 x 0.31) + (40 x 11.47) = 768.80 (2,000,000 x 97%) + (2,000,000 x 10% x 3/12) = 1,990,000 (2,000 X 1,040) - 2,000,000 = 80,000 (4,000,000 x 97%) + (4,000,000 x 12% x 3/12) = 4,000,000 1,070,000 - (96% x 1,000,000) = 110,000 1,000,000 x 12% x 1/12 = 10,000 1,000,000 - 30,000 + 50,000 = 1,020,000; 1,020,000 - (40,000 x 20) - 10,000 = 210,000 Using the book value method, no gain or loss is recorded upon conversion 1,032,880 x 10% x 6/12 = 51,644 1,032,880 - {(1,000,000 x 6%) - 51,644}= 1,024,524 1,878,000 - {(10% x 1,878,000) -(2,000,000 x 9%) = 1,885,800 10,000,000 – 1,145,000 = 8,855,000; (8,855,000 x 6%) - (10,000,000 x 5%) = 31,300 5,680,000 x 8% x 6/12 = 227,200 (2,100,000 x 6%) – (2,000,000 x 7%) = 14,000; 2,100,000 – 14,000 = 2,086,000 BCV; BCV of P2,086,000 – face value of P2,000,000 = P86,000 premium 1,032,880 x 10% = 103,288 1,902,800 x 10% = 190,280 effective interest; 190,280 effective interest – nominal interest of 160,000=30,280 discount amortization; carrying value = 1,902,800 + 30,280 – principal payment of 400,000 = 1,533,080 2,400,000 X 12% = 288,000 2,400,000 – 1,000,000 + 288,000 = 1,688,000 1,688,000 X 12% = 202,560; 1,000,000 – 202,560 = 797,440 3,000,000 – 2,400,000 = 600,000; 600,000 – 288,000 = 312,000 4,500,000 – 3,000,000 = 1,500,000 6,000,000 + 600,000 = 6,600,000 (6000,000 x 0.6209) +(6000,000 x 8% x 3.7908) = 5,544,984 6,600,000 – 5,544,984= 1,055,016 6,600,000 – [(5,000,000 x 6209) +(5,000,000 x 12 x 3.7908)] =1,221,020 24 Chapter - Non-Current Liabilities MC44 B 8,000,000 + 640,000 = 8,640,000 (6,000,000 x 0.8573) + (6,000,000 x 10% x 1.7833) = 6,213,780 8,640,000 – 6,213,780 = 2,426,220 25 ... 4 ,28 0,7 52 4 ,26 0,405 29 8 ,22 8 21 ,7 72 4 ,23 8,633 29 6,704 23 ,29 6 4 ,21 5,337 29 5,074 24 , 926 4,190,411 Cash 4 ,28 1,15 Bonds Payable Premium on Bonds Payable 08/31/09 12/ 31/09 2/ 28/10 8/31/10 12/ 31/10 2/ 28/11... 26 7,769 32, 231 5, 323 ,145 26 6,157 33,843 5 ,28 9,3 02 264,465 35,535 5 ,25 3,767 26 2,688 37,3 12 5 ,21 6,455 156,494 23 ,506 3,106,367 155,318 24 ,6 82 3,081,685 154,084 25 ,916 3,055,769 1 52, 788 27 ,21 2 3, 028 ,557... (JFC) (a) 20 09 6,949,800 x 9%= 625 ,4 82 625 ,4 82 x 4/ 12 625 ,4 82 x 8/ 12 6,949,800 x 1.09 = 7,575 ,28 2 7,575 ,28 2 x 9%= 681,775 681,775 x 4/ 12 681,775 x 8/ 12 7,575 ,28 2 x 1.09 = 8 ,25 3,057 8 ,25 7,057 x