Illustrative Cases

1. Pulilio Company’s December 31, 2017 statement of financial position contained the following
items in the long-term liabilities section:
10% registered bonds, callable in 2018,
due 2020, secured by machinery
P3,000,000
11% bonds, convertible into ordinary
shares beginning in 2018, due in 2017,
secured by realty 5,000,000
12% collateral trust bonds (P500,000
maturing annually) 7,000,000
What is the total amount of Pulilio’s term bonds and debenture bonds, respectively?
2. On March 1, 2017, Tiaong Company issued 10,000 of its P1,000 face value bonds at 95 plus
accrued interest. Tiaong Company paid bond issue cost of P1,000,000. The bonds were
dated November 1, 2016, mature on November 1, 2021, and bear interest at 12% payable
semiannually on November 1 and May 1. The net amount that Tiaong receive from the bond
issuance is
3. On January 1, 2017, Marimar Company issued 10,000 of its 12%, P1,000 face value 5-year
bonds at 105. Interest on the bonds is payable annually every December 31. In connection
with the sale of these bonds, Marimar paid the following expenses:
Promotion costs P100,000
Engraving and printing 400,000
Underwriter’s commissions 500,000
Using the straight line method, what amount should Marimar report as bond interest expense
for the year 2017?