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Problem 1:
a.
Notes Payable 900,000 Equipment 600,000
Accrued interest 90,000 Old financial liab. (990,000)
total financial liab: 990,000 gain on extinguishment 390,000
b.
Bonds Payable 10,000,000 FV of OSC (300k x 28) 8,400,000
Accrued Interest 900,000 Total financial liab. (10,900,000)
total financial liab 10,900,000 Gain on extinguishment 2,500,000
c.
PV of Principal 8,000,000 x 0.7972 = 6,377,600
PV of Interest 640,000 x 1.6901 = 1,081,664
PV of new loan 7,459,264
Face value (8,000,000)
Discount 540,736
Principal 10,000,000
Interest (10M x 12%) 1,200,000
CA of old Liability 11,200,000 x 10% = 1,120,000 33%
PV of new loan (7,459,264)
Gain on extinguishment 3,740,736
Interest payment Interest Expense Discount Present Value
540,736.00 7,459,264.00
640,000 895,112.00 255,112.00 7,714,376.00
640,000 925,725.00 285,624.00 8,000,000.00
d.
PV of principal 3,000,000 x 0.5935 = 1,780,500
PV of Interest 360,000 x 3.6959 = 1,330,524
PV of new liab 3,111,024 – 3M = 111,024
CA of old liab (3,330,000) x 10% = 333k 6.68%
Gain on modification 218,976
a.
4/1/18 Equipment 2,591,760
Notes payable 2,591,760
2,591,760.00
800,000.
3/31/19 00 233,258.00 566,742.00 2,025,018.00
800,000.
3/31/20 00 182,252.00 617,748.00 1,407,270.00
800,000.
3/31/21 00 126,654.00 673,346.00 733,924.00
800,000.
3/31/22 00 66,076.00 733,924.00 -
Problem 3:
9% 4 periods
a. 800k x 3.2397= 2,591,760
b.
Discount 3.2M-2,591,760= 608,240
Problem 4:
a.
2018 2019 2020 2021
6,949,800 x 9% = 625,482
625,482 x 4/12 208,494
625,482 – 208,494 416,988
6,949,800 x 1.09 = 7,575,282
7,575,282 x 9% = 681,775
681,775 x 4/12 227,258
681,775 – 227,258 454,517
7,575,282 x 1.09 = 8,257,057
743,135 x 4/12 247,712
743,135 – 247,712 495,423
Interest expense 208,494 644,246 702,229 495,423
b.
6,949,800 + 208,494 + 644,246 = 7,802,540
c.
2019
Noncurrent liab:
Notes Payable 6,949,800
Interest payable 208,494 + 644,246 852,740
Total 7,802,540
2020
Noncurrent liab:
Notes payable 6,949,800
Interest payable 852,740 + 702,229 1,554,969
Total 8,504,769
Problem 5:
a.
12,734,120 – 50k = 12,684,120
10M x 12% = 1.2M
d.
8,118,049