ABC Company is in financial difficulties and agreed to issue 20,000 of its P20 par value shares in settlement of its loan from a bank of P1,000,000. On this date, the accrued interest not yet paid by ABC Company amounted to P120,000. The fair market value of the shares on this date is P40 per share while the fair market value of the liability is P1,200,000. According to our standards, what amount of gain or loss from extinguishment of debt shall be recognized from this equity swap?
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- Seal Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Seal has a P2,500,000 note payable to United Bank. The bank accepted an equity interest in Seal Company in the form of 200,000 ordinary shares quoted at P12 per share. The par value is P10 per share. The fair value of the note payable on the date of restructuring is P2,200,000. What amount should be recognized as gain from debt extinguishment as a result of the "equity swap”? a. 400,000 b. 100,000 c. 500,000 d. 200,000Good Company has an overdue notes payable of P1,500,000 to Better Company. Accrued interest on the notes amounts to P150,000. Good entered into an agreement with Better Company to exchange equity securities in settlement for the debt. Good Company is issuing 20,000 shares of its P50 par value ordinary shares. The ordinary shares is currently selling at P65. How much is the gain on debt restructuring? a.) P0 b.) P250,000 c.) P350,000 d.) P650,000Seal Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Seal has a P2,500,000 note payable to United Bank. The bank accepted an equity interest in Seal Company in the form of 200,000 ordinary shares quoted at P12 per share. The par value is P10 per share. The fair value of the note payable on the date of restructuring is P2,200,000. What amount should be recognized as share premium from the issuance of the shares? a. 500,000 b. 100,000 c. 400,000 d. 200,000
- The Abra Company owes P200,000 on a note payable plus P8,000 in interest to its bank. The note is scoured by inventory with a book value of P160,000 and a fair value of P120,000. What amount will the bank received if unsecured creditors receive 75% of their claims? At the time of corporate liquidation, the redeemable preferred stockholders received only the partial amount of the redemption value of their shares of stocks. Which of the creditors of this dissolved and liquidated corporation received the full amount of their claims? Fully secured creditors only Fully secured creditors and unsecured creditors with priority only Partially secured creditors and unsecured creditors without priority only All the creditors of the corporationA company is experiencing financial difficulty and is negotiating a trouble debt restructuring with its creditors for its P6,000,000 note payable. The bank accepted an equity interest from the company in a form of 200,000 ordinary shares. The fair value of ordinary shares is P20 per share. What is the amount of gain on debt restructuring to be reported by the company in its profit or loss?Katipunan Company has financial liability (accounted under amortized cost) with face amount of P5,000,000 and a carrying amount of P4,800,000. In addition, there is an unpaid interest of P250,000, accrued. The creditor agreed to the settlement of the bonds payable in exchange for 50,000 shares of P50 par value. The shares have current market value of P4,500,000. How much should be recorded as additional share premium as a result of the extinguishment of the liability?
- 46. A company is experiencing financial difficulty and is negotiating a trouble debt restructuring with its creditors for its P6,000,000 note payable. The bank accepted an equity interest from the company in a form of 200,000 ordinary shares. The fair value of ordinary shares is P24 per share while the par value of the ordinary shares is P20 per share. What is the amount of gain on debt restructuring to be reported by the company in its profit or loss?21. Seal Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Seal has a P2,500,000 note payable to United Bank. The bank accepted an equity interest in Seal Company in the form of 200,000 ordinary shares quoted at P12 per share. The par value is P10 per share. The fair value of the note payable on the date of restructuring is P2,200,000. What amount should be recognized as gain from debt extinguishment as a result of the "equity swap”? * a. 400,000 b. 100,000 c. 500,000 d. 200,000 Refer to MC No. 21. What amount should be recognized as share premium from the issuance of the shares? * a. 500,000 b. 100,000 c. 400,000 d. 200,000On Jan. 1, 2021, Gel Co. settled a P 1,000,000 loan by issuing to the lender 10,000 shares with par value of P 50 per share. The shares are selling at 120 per share on Jan. 1, 2021. How much gain/(loss) on extinguishment of debt is to be recognized? *a. P 200,000b. (P 200,000)c. P 500,000d. (P 500,000)
- Assume the following independent cases: (a) At the beginning of the year, a check was issued for P400,000 as payment for a piece of land and the buyer assumed the liability for unpaid taxes in arrears for the previous year, P10,000 and those assessed for the current year, P9,000.(b) A company issued 14,000 ordinary shares (P50 par) with a market value of P60 per share (based upon a recent sale of 100 shares) for the land. The land was recently appraised at P800,000 by independent and professional appraisers.(c) A company rejected an offer to purchase the land for P8,000,000 cash two years ago. Instead, the company issued 100,000 ordinary shares for the land (market value of the ordinary share, P78 each based on several recent large transactions and normal weekly stock trading volume).How much is the cost of land acquired in (a), (b), and (c), respectively? a. 419,000; 800,000; 7,800,000 b. 410,000; 800,000; 7,800,000 c. 410,000; 840,000; 7,800,000 d. 419,000; 840,000;…4.Assume the following independent cases: (a) At the beginning of the year, a check was issued for P400,000 as payment for a piece of land and the buyer assumed the liability for unpaid taxes in arrears for the previous year, P10,000 and those assessed for the current year, P9,000.(b) A company issued 14,000 ordinary shares (P50 par) with a market value of P60 per share (based upon a recent sale of 100 shares) for the land. The land was recently appraised at P800,000 by independent and professional appraisers.(c) A company rejected an offer to purchase the land for P8,000,000 cash two years ago. Instead, the company issued 100,000 ordinary shares for the land (market value of the ordinary share, P78 each based on several recent large transactions and normal weekly stock trading volume).How much is the cost of land acquired in (a), (b), and (c), respectively? a. 419,000; 800,000; 7,800,000 b. 410,000; 800,000; 7,800,000 c. 410,000; 840,000; 7,800,000 d. 419,000; 840,000;…On Jan. 1, 2021, Bee Co. settled a P 1,000,000 loan by issuing to the lender 10,000 shares with par value of P 50 per share. The shares are selling at 120 per share on Jan. 1, 2021. How much gain/(loss) on extinguishment of debt is to be recognized?a. P 200,000b. (P 200,000)c. P 500,000d. (P 500,000)