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    Bonds Payable

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    angie_zmd

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    Bonds Payable

    Uploaded by

    angie_zmd
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    BONDS PAYABLE

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    13 views2 pages

    Bonds Payable

    Uploaded by

    angie_zmd

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    © All Rights Reserved
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    BONDS PAYABLE

    THEORIES note: The equity instruments issued to extinguish a financial liability


    shall be measured at the following amount in the order of priority:
    1. In a debt restructuring considered an asset swap, the gain on extinguishment
    is equal to a. Fair value of equity instruments issued

    Excess of carrying amount of the debt over the carrying amount of b. Fair value of liability extinguished
    the asset
    c. Carrying amount of liability extinguished

    2. For a debt restructuring involving substantial modification of terms, it is


    appropriate for a debtor to recognize a gain when the carrying amount of the
    debt? 4. If the fair value of the equity instruments issued cannot be reliability
    measured, the equity instruments issued to extinguish a financial liability shall
    Exceeds the present value of the future cash payments be measured at:

    note: PFRS 9, paragraphs 3.3.2, provides that the substantial modification Fair Value of the liability extinguished
    of terms of an existing liability shall be accounted for as an extinguishment
    of the old financial liability and the recognition of a new financial liability. 5. The gain or loss from the extinguishment of a financial liability by issuing
    equity instruments presented as:
    Under Application Guidance B3.3.6 of PFRS 9, there is a substantial
    modification of terms if the gain or loss on extinguishment is at least 10% Separate line item in the income statement
    or 10% or more of the carrying amount of the old financial liability.
    6. The difference between the carrying amount of the financial liability
    The difference between the carrying amount of the old liability and the extinguished and the “initial measurement” of the equity instrument issued
    present value of the new or reconstructed liability shall be accounted for as shall be recognized in profit or loss.Such gain or loss on extinguishment shall
    a gain or loss extinguishment. be disclosed as a separate line item in the income statement.

    The present value of the new liability shall be determined using the original
    effective interest rate.

    Any cost of fee incurred as a result of the substantial modification of terms


    shall be recognized as part of the gain or loss on extinguishment.

    3. An entity shall initially measure equity instruments issued to extinguish a


    financial liability at

    Fair value of the equity instruments issued


    (1) Jenkins Corporation has 2,500,000 of short-term debt it expects to retire with
    proceeds from the sale of 90,000 shares of common stock. If the stock is sold for
    20 per share subsequent to the balance sheet date, but before the balance sheet
    is issued, what amount of short-term debt could be excluded from current
    liabilities?

    Answer 90,000 shares x 20 per share = P1,800,000

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