Problem 9-1

Total Liability 6,000,000

Carrying Amount of Land 1,500,000
Carrying Amount of Building 4,200,000
Gain 300,000

Mortgage Payable 5,000,000

Accrued Interest Payable 1,000,000
Accumulated Depreciation 1,800,000
Land 1,500,000
Building 6,000,000
Gain on Extinguishment 300,000

Problem 9-2
Under IFRS
Note Payable 1,000,000
Accrued Interest Payable 200,000
Total Liability 1,200,000
Carrying Amoutn of Patent 600,000
Gain on Extinguishment 600,000

Note Payable 1,000,000

Accrued Interest Payable 200,000
Patent 600,000
Gain on Extinguishment 600,000

Under USA GAAP

FV of Patent 1,100,000
CA of Patent 600,000
Gain on Exchange 500,000

Note Payable 1,000,000

Accrued Interest Payable 200,000
Total Liability 1,200,000
FV of Patent 1,100,000
Gain on Debt Restructuring 100,000

Note Payable 1,000,000

Accrued Interest Payable 200,000
Patent 600,000
Gain on Exchange 500,000
Gain on Debt Restructuring 100,000

Problem 9-3
Bond Payable 5,000,000
Premium 150,000
Accrued Interest Payable 300,000
Land 3,200,000
Gain on Extinguishment 2,250,000
Problem 9-4
Req 1 FV of Shares Issued 4,550,000
Par Value of Shares Issued 3,500,000
Share Premium 1,050,000

Mortgage Payable 5,000,000

Accrued Interest Payable 500,000
CA of Mortgage Payable 5,500,000
FV of Shares Issued 4,550,000
Gain on Extinguishment 950,000

Mortgage Payable 5,000,000

Accrued Interest Payable 500,000
Share Capital 3,500,000
Share Premium 1,050,000
Gain on Extinguishment 950,000

Req 2 FV of Mortgage Payable 4,700,000

Par Value of Shares Issued 3,500,000
Share Premium 1,200,000

Mortgage Payable 5,000,000

Accrued Interest Payable 500,000
CA of Mortgage Payable 5,500,000
FV of Mortgage Payable 4,700,000
Gain on Extinguishment 800,000

Mortgage Payable 5,000,000

Accrued Interest Payable 500,000
Share Capital 3,500,000
Share Premium 1,200,000
Gain on Extinguishment 800,000

Req 3 CA of Mortgage Payable 5,500,000

Par Value of Shares Issued 3,500,000
Share Premium 2,000,000
No gain or loss

Mortgage Payable 5,000,000

Accrued Interest Payable 500,000
Share Capital 3,500,000
Share Premium 2,000,000

Problem 9-5
Note Payable 6,000,000
Accrued Interest Payable 600,000
Total Liability 6,600,000
 CA of Inventory 3,600,000
Gain on Extinguishment 3,000,000

Note Payable 6,000,000

Accrued Interest Payable 600,000
Inventory 3,600,000
Gain on Extinguishment 3,000,000

Problem 9-6
Req 1 Note Payable 5,000,000
Accrued Interest Payable 400,000
Total Liabiltiy 5,400,000

FV of Ordinary Shares 3,000,000

Par Value of Shares Issued 1,500,000
Share Premium 1,500,000

FV of Preference Shares 1,500,000

Par Value of Shares Issued 250,000
Share Premium 1,250,000

Note Payable 5,000,000

Accrued Interest Payable 400,000
CA of Note Payable 5,400,000
FV of Shares Issued 4,500,000
Gain on Extinguishment 900,000

Note Payable 5,000,000

Accrued Interest Payable 400,000
Ordinary Share Capital 1,500,000
Share Premium - OS 1,500,000
Preference Share Capital 250,000
Share Premium - PS 1,250,000
Gain on Extinguishment 900,000

Req 2 Market Value Fraction

Ordinary Shares 3,000,000 1 3,200,000
Preference Shares 1,500,000 0 1,600,000
4,500,000 4,800,000

FV of Note Payable 3,200,000

Par Value of Ordinary Shares 1,500,000
Share Premium 1,700,000

FV of Note Payable 1,600,000

Par Value of Preference Shares 250,000
Share Premium 1,350,000

Note Payable 5,000,000

 Accrued Interest Payable 400,000
CA of Note Payable 5,400,000
FV of Note Payable 4,800,000
Gain on Extinguishment 600,000

Note Payable 5,000,000

Accrued Interest Payable 400,000
Ordinary Share Capital 1,500,000
Share Premium - OS 1,700,000
Preference Share Capital 250,000
Share Premium - PS 1,350,000
Gain Extinguishment 600,000

Req 3 Market Value Fraction CA of Note Payable

Ordinary Shares 3,000,000 1 3,600,000
Preference Shares 1,500,000 0 1,800,000
4,500,000 5,400,000

CA of Note Payable 3,600,000

Par Value of Ordinary Shares 1,500,000
Share Premium 2,100,000
No gain or loss

CA of Note Payable 1,800,000

Par Value of Preference Shares 250,000
Share Premium 1,550,000
No gain or loss

Note Payable 5,000,000

Accrued Interest Payable 400,000
Ordinary Share Capital 1,500,000
Share Premium - OS 2,100,000
Preference Share Capital 250,000
Share Premium - PS 1,550,000

Problem 9-7 FV of Shares Issued 4,500,000

Par Value of Shares Issued 2,500,000
Share Premium 2,000,000

Bonds Payable 5,000,000

Accrued Interest Payable 250,000
Discount 200,000
CA of Bonds Payable 5,050,000
FV of Shares Issued 4,500,000
Gain on Extinguishment 550,000

Bonds Payable 5,000,000

Accrued Interest Payable 250,000
Discount 200,000
 Share Capital 2,500,000
Share Premium 2,000,000
Gain on Extinguishment 550,000

Req 2 FV of Bond Payable 4,600,000

Par Value of Shares Issued 2,500,000
Share Premium 2,100,000

Bond Payable 5,000,000

Accrued Interest Payable 250,000
Discount 200,000
CA of Bond Payable 5,050,000
FV of Bond Payable 4,600,000
Gain on Extinguishment 450,000

Bonds Payable 5,000,000

Accrued Interest Payable 250,000
Discount 200,000
Share Capital 2,500,000
Share Premium 2,100,000
Gain on Extinguishment 450,000

Req 3 CA of Bonds Payable 5,050,000

Par Value of Shares Issued 2,500,000
Share Premium 2,550,000
No gain or loss

Bonds Payable 5,000,000

Accrued Interest Payable 250,000
Discount 200,000
Share Capital 2,500,000
Share Premium 2,550,000

Problem 9-8
Note Payable 5,000,000
Historical Cost of Land 2,800,000
Gain on Extinguishment 2,200,000

Note Payable 5,000,000

Land 2,800,000
Gain on Extinguishment 2,200,000

FV of Note Payable 4,800,000

Par Value of Shares Issued 4,000,000
Share Premium 800,000

Note Payable 5,000,000

FV of Note Payable 4,800,000
Gain on Extinguishment 200,000
 Note Payable 5,000,000
Share Capital 4,000,000
Share Premium 800,000
Gain on Extinguishment 200,000

Problem 9-9
PV of Principal 6,001,100
PV of Interest 1,248,310
Total PV of New Liability 7,249,410

Note Payable 8,000,000

Accrued Interest 640,000
CA of Previous Liability 8,640,000
PV of New Liability 7,249,410
Gain on Extinguishment 1,390,590

Year 2020
Jan-01 Note Payable - Previous 8,000,000
Accrued Interest Payable 640,000
Note Payable - New 7,000,000
Premium 249,410
Gain on Extinguishment 1,390,590

Interest Paid 700,000

Interest Expense 579,953
Premium Amortization 120,047

Dec-31 Interest Expense 579,953

Premium 120,047
Cash 700,000

Year 2021
Dec-31 Interest Expense 570,637
Premium 129,363
Cash 700,000

Note Payable 7,000,000

Cash 7,000,000

Problem 9-10PV of Principal 3,495,250

PV of Interest 1,336,412
Total PV of New Liability 4,831,662
Face Value 5,500,000
Discount 668,338

Note Payable - Previous 6,000,000

Accrued Interest 720,000
CA of Previous Liability 6,720,000
PV of New Liability 4,831,662
Gain on Extinguishment 1,888,338

Interest Paid 440,000

Interest Expense 579,799
Disocunt Amortization 139,799

Note Payable - Previous 6,000,000

Accrued Interest Payable 720,000
Discount 668,338
Note Payable - New 5,500,000
Gain on Extinguishment 1,888,338

Interest Expense 579,799

Cash 440,000
Discount 139,799