Stephanie Joy D.

Vito BSMA-II
UNIT 4 – TOPIC 1
Assessment
• Problem #1:

1. Answer: b. P 2,160,000
2. Answer: a. P 259,200

Present value (600,000 × 3.60) P 2,160,000

Interest expense (12% × 2,160,000) P 259,200

• Problem #2: Answer: d. P 942,400

PV of note payable (200,000×5.712) P 1,142,400

Payment on 12/31/2021 (200,000)
Balance - 12/31/2021 P 942,400

• Problem #3: Answer: b. P 1,000,000

Note payable P 1,000,000

(Although the internet on the note is lower than the prevailing market rate, the note payable is shown at fave amount because it is
short term and made in the usual trade terms.)
 • Problem #4: Answer: c. P 232,000

Accrued interest from March 1, 2020 to February 28,2022 (1,000,000×12%) P 120,000

Accrued interest from March 1, 2020 to December 31,2022 112,000
(1,000,000+120,000×12%×10/12)

Total Accrued interest payable P 232,000

• Problem #5:

1. Answer: c. 408,150

2. Answer: a. 40,000

3. Answer: c. 91,850

4. Answer: d. 0

: Question #2
(500,000×8%) P 40,000

Question #3
(500,000-408,150) P 91,850

If the fair value option is elected for reporting a financial liability, the accounting rules for report discount or premium are no longer
apply. Thus, the note payable should be reported i December 31 ,2021 at the fair value of ₱408,150 and a net gain of ₱500,000 minus
₱408,150 or ₱91,850 is reported in 2021.