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    INTERMEDIATE ACCOUNTING Vol. 2, Empleo and Robles 2006 Ed, Pp. 123-124

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    Ronn Robby Rosales
    The document provides information about non-current liability exercises for two companies, Ohio Company and Sim Company. For Ohio Company, it issued $10 million bonds on January 2, 2015 at a premium. It calls $5 million of the bonds on January 1, 2019. The exercises require calculating amortization of premium, carrying value, gain/loss on retirement, interest expense, and unamortized premium at various dates. For Sim Company, it issued $2 million bonds on March 1, 2015 at a discount due to a higher market rate. The bonds were retired on June 30, 2018. The exercises require calculating interest expense, carrying amount, cash paid for retirement, and gain/loss on retirement.

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    INTERMEDIATE ACCOUNTING Vol. 2, Empleo and Robles 2006 Ed, Pp. 123-124

    Uploaded by

    Ronn Robby Rosales
    404 views1 page
    The document provides information about non-current liability exercises for two companies, Ohio Company and Sim Company. For Ohio Company, it issued $10 million bonds on January 2, 2015 at a premium. It calls $5 million of the bonds on January 1, 2019. The exercises require calculating amortization of premium, carrying value, gain/loss on retirement, interest expense, and unamortized premium at various dates. For Sim Company, it issued $2 million bonds on March 1, 2015 at a discount due to a higher market rate. The bonds were retired on June 30, 2018. The exercises require calculating interest expense, carrying amount, cash paid for retirement, and gain/loss on retirement.

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    Original Title

    Exercises for NCL

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    The document provides information about non-current liability exercises for two companies, Ohio Company and Sim Company. For Ohio Company, it issued $10 million bonds on January 2, 2015 at a premium. It calls $5 million of the bonds on January 1, 2019. The exercises require calculating amortization of premium, carrying value, gain/loss on retirement, interest expense, and unamortized premium at various dates. For Sim Company, it issued $2 million bonds on March 1, 2015 at a discount due to a higher market rate. The bonds were retired on June 30, 2018. The exercises require calculating interest expense, carrying amount, cash paid for retirement, and gain/loss on retirement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    404 views1 page

    INTERMEDIATE ACCOUNTING Vol. 2, Empleo and Robles 2006 Ed, Pp. 123-124

    Uploaded by

    Ronn Robby Rosales
    The document provides information about non-current liability exercises for two companies, Ohio Company and Sim Company. For Ohio Company, it issued $10 million bonds on January 2, 2015 at a premium. It calls $5 million of the bonds on January 1, 2019. The exercises require calculating amortization of premium, carrying value, gain/loss on retirement, interest expense, and unamortized premium at various dates. For Sim Company, it issued $2 million bonds on March 1, 2015 at a discount due to a higher market rate. The bonds were retired on June 30, 2018. The exercises require calculating interest expense, carrying amount, cash paid for retirement, and gain/loss on retirement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Exercises for Non-Current Liabilities1

    A. On January 2, 2015, Ohio Company issued P10,000,000 12% bonds for P12,734,120 due
    December 31, 2024. Legal and other costs of P50,000 were incurred in connection with the issue.
    Interest on the bonds is payable annually each December 31.

    The effective interest on these bonds was computed to be 8% after considering the bond issue
    cost of P50,000.

    The bonds are callable at 101 and on January 2, 2019, Ohio called P5,000,000 face amount of the
    bonds and retired them.

    Determine the following:

    1. Amortization of the premium for the year ended December 31, 2015.
    2. Carrying Value of the bonds on December 31, 2018.
    3. Gain or Loss on retirement of the bonds on January 2, 2019
    4. Interest expense for the year ended December 31, 2020
    5. Unamortized premium on bonds payable on December 31, 2020

    B. Sim Company is issuing P2,000,000 of 8.5%, 5 year bonds. The bonds are dated and sold onn
    March 1, 2015. Interest payment dates are March 1 and September 1. With a market rate of 9%,
    the bonds were sold for P1,963,000. The company uses the effective interest method of
    amortization.

    The bonds were retired on June 30, 2018 at face value plus accrued interest.

    Required:

    1. What is the amount of interest expense and discount amortization that Sim will record on
    September 1, 2015, the first semi-annual interest payment date?
    2. What is the carrying amount of the bonds on the December 31, 2015 Statement of
    Financial Position, after all year-end adjustments are made?
    3. What amount of cash was paid for the retirement of bonds and payment of accrued
    interest on June 30, 2018?
    4. What is the gain or loss on retirement of bonds?

    1
    INTERMEDIATE ACCOUNTING vol. 2, Empleo and Robles 2006 ed, pp. 123-124.

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