4/20/2021 QUIZ 2

QUIZ 2 Total points 50/50

The respondent's email address (maryjoy.fundal.asis@apcas.ph.education) was

recorded on submission of this form.

20 of 20 points

In the amortization schedule for discount on bonds payable * 2/2

The carrying amount of the bonds payable declines eventually to the face
amount

The reduction in the discount is less in each successive interest payment

The total effective interest over the term to maturity is equal to the amount
of the discount plus cash interest paid

The interest expense is less with each successive interest payment

What is the effective interest rate of bond measured at amortized cost? 2/2
*

The interest rate currently charged by the entity or other similar bond.

The interest rate that exactly discounts estimated future cash payments
through the expected life of the bond or when appropriate, a shorter period
to the net carrying amount of the bond.

The stated rate of the bond.

The basic risk-free interest rate that is derived from observable government
bond prices.

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4/20/2021 QUIZ 2

An amortization schedule for bonds issued at a premium * 2/2

All of the given choices are correct

Summarizes the amortization of the premium on bonds payable, a contra-asset

account

Is reported in the statement of financial position

Is a schedule that reflects the changes in the bonds payable over the term
to maturity

How would the amortization of premium on bonds payable affect the 2/2
carrying amount of bond and net income, respectively? *

Increase and Decrease

Increase and Increase

Decrease and Decrease

Decrease and Increase

If bonds are issued at a premium, this indicates * 2/2

The nominal rate exceeds the yield rate.

No necessary relationship exists between the two rates.

The yield rate exceeds the nominal rate.

The yield rate and nominal rate coincides.

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4/20/2021 QUIZ 2

Unamortized bond discount should be reported as * 2/2

Deferred charge

Direct deduction from the face amount of the bond

Direct deduction from the present value of the bond

Part of the bond issue cost

What is the market rate of interest for a bond issue which sells less than 2/2
the face value? *

Equal to the rate stated in the bonds.

Less than the rate stated in the bonds.

Higher than the rate stated in the bonds.

Independent of rate stated in the bonds.

For a bond issue which sells more than face value, the market rate of 2/2
interest is *

Equal to rate stated on the bond.

Less than rate stated on the bond.

Dependent on the rate stated on the bond.

Higher than rate stated on the bond.

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4/20/2021 QUIZ 2

When bonds are retired prior to maturity date * 2/2

The issuer probably will report an ordinary gain or loss

GAAP has been violated

The issuer will not report a gain or loss

The issuer probably will report an extraordinary gain or loss

An entity has bonds outstanding during a year in which the market rate 2/2
of interest has risen. The entity elected the fair value option . What will
the entity report for the year? *

A loss and no interest expense

Interest expense and loss

A gain and no interest expense

Interest expense and gain

Answer the following questions based on the data in the image 10 of 10 points

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4/20/2021 QUIZ 2

Answer the following questions based on the data in the image

What is the gain or loss that should be recognized in 2020 to report the 4/4
bond at fair value? *

260,000 loss

260,000 gain

340,000 loss

600,000 loss

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4/20/2021 QUIZ 2

What is the carrying amount of the bonds payable on December 31, 3/3
2020? *

5,250,000

5,125,000

5,000,000

5,385,000

What amount should be reported as interest expense for 2020? * 3/3

538,500

500,000

646,200

600,000

Answer the following question based on the data in the image 4 of 4 points

What is the issue price for each P 1,000 bond? * 4/4

1,000

924

1,080

942

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4/20/2021 QUIZ 2

Answer the following question based on the data in the image

Answer the following questions based on the data in the image 8 of 8 points

What amount should be recorded as a loss on the early extinguishment 4/4

of the bonds? *

336,000

462,000

378,000

120,000

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4/20/2021 QUIZ 2

What is the carrying amount of the bonds payable on July 1, 2020? * 4/4

5,742,000

5,700,000

6,000,000

5,658,000

Answer the following questions based on the data in the image

Untitled Section 8 of 8 points

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4/20/2021 QUIZ 2

On July 1, 2020, Althea Company issued at 104, five thousand 10% bonds 4/4
with a face amount of P1,000 per bond. The bonds were issued through
an underwriter to whom the entity paid bond issue cost of P125,000. On
July 1, 2020, what is the carrying amount of the bonds payable? *

5,075,000

4,875,000

5,325,000

5,200,000

On January 1, 2020, Allen Company issued a ten-year bonds with a face 4/4
amount of P 6,000,000 and a stated rate of 10% payable annually at the
end of each year. The bonds were priced to yield 12%. What is the issue
price of the bonds? *

6,737,112

6,000,000

1,932,000

5,322,000

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