23. On April 1, 2004, Greg Corporation issued, at 99 pIus accrued interest, 2,000 of its 8% 1,000 bonds.

The bonds are dated

January 1, 2004, mature on January 1, 2014, and pay interest on July and January 1. Greg paid bond issue costs of 110,000. From
the bond issuance, Greg received net cash of:
a. 2,020,000 b. 1,980,000 c. 1,950,000 d. 1,910,000

24. As an inducement to enter a lease, Arts inc. a lessor, grants Hompson Corp., a lessee, nine months of free rent under a five
year operating lease. The lease is effective on July 1, 2007 and provides for monthly rental of 10,000 to begin April 1, 2008. In
Hompson’s statement of financial position for the year ended June 30, 2008, rent payable should be reported at: a. 0
b. 72,000 c. 92,000 d 102,000

25. On December 31, 2010, Deanne Company leased equipment under a finance lease. Annual lease payments of P400,000 are
due December 31 for 10 years. The equipment’s useful life is 10 years, and the interest rate implicit in the lease is 10%. The lease
obligation was recorded on December 31, 2010 at P2,700,000 and the first lease payment was made on that date.
What amount should Deanne Company include in current liabilities in relation to the finance lease in its December 31, 2010
statement of financial position?
a. 130,000 b. 70, 000 c. 230,000 d. 400,000

26. Neliza Company uses leases as a method of selling its products in 2010, Nezil Company completed construction of a
passenger ferry. On January 1, 2010, the ferry was leased on a contract specifying that ownership of the ferry will transfer to the
lessee at the end of the lease period. Annual lease payments do not include executory costs. Other terms of the agreement are as
follows:
Original cost of the ferry 9,000,000
Lease payments payable in advance 2,000,000
Estimated residual value 1,000,000
Implicit interest rate 12%
Date of first lease payment January 1, 2010
Lease term 10 years
Present value of an annuity due 1 at 12% for 10 periods 6.33
Present value oft at 12% for 10 periods 0.32
What Is the Interest Income for 2010?
a. 1,279,200 b. 1,317,600 c. 1,519,200 d. 1,557,600

27. Black Company reported taxable income of P8,000,000 on Its Income tax return for the year ended December 31,2009, Its
first year of operations. Temporary differences between financial Income and taxable Income for the year are as follows:
Tax depreciation in excess of book depreciation 800,000
Accrual for product liability claim in excess of Actual claim 1,200,000
Reportable instalment sales income in excess of
Taxable Instalment sales Income 2,600,000
The enacted Income tax rate is 30% for 2009 and future years. What is the total Income tax expense to be reported in the 2009
income statement?
a. 2,040,000 b. 2,400,000 c. 2,580,000 d. 3,060,000

28. LEDA Company made an accounting profit of P4,000,000 for the year ended December 31, 2010. Included In the accounting
profit were the following items of income and expenses
Donation to political parties 1,000,000
Depredation - 20% 1,600,000
Annual leave expense 700,000
Rent revenue 1,200,000
For tax purposes, the depreciation rate is 25%, the annual leave paid Is P800,000 and the rent received Is P1,000,000. The entity
follows the cash basis for tax purposes. The income tax rate is 30%. What is the current liability on December 31,2010?
a. P1,450,000 b. P,200,000 c. P1,290,000 d.P1,368,500

29. Eliot Corporation’s liabilities at December 31, 2009 were as follows:

Accounts payable and accrued interest P2,000,000
5-year 10% Notes payable — due December 31,2012 5,000,000
Part of the loan agreement is for Elliot to appropriate a fixed amount of its retained earnings annually until the amount of
appropriation has equalled the face of the obligation. As of December 31, 201)9, Elliot Corporations has yet to comply with the
loan agreement.
In Its December 31, 2009 balance sheet, Eliot should report current liabilities at