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Summary

Due to extreme financial difficulties, Armada Company had negotiated a restructuring of a 10% P5,000,000 note payable due on December 31, 2020. The unpaid interest on the note on such date was P500,000. The creditor agreed to reduce the face amount to P4,000,000, forgive the unpaid interest, reduce ...

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Duet oex t r emefinanc i al di ffic ul t i es ,Ar madaCompanyhadnegot i at edar es t r uc t ur i ngof a10% P5, 000, 000not epay abl edueonDecember31,2020.Theunpai di nt er es tont he not eons uchdat ewasP500, 000.Thec r edi t oragr eedt or educ et hef aceamountt o P4, 000, 000,f or gi v et heunpai di nt er es t ,r educet hei nt er es tr at et o8% andex t endt he duedaddt et hr eey ear sf r om December31,2020.Thepr es entv al ueof1at10% f or t hr eeper i odsi s0. 75andt hepr esentv al ueofanor di nar yannui t yof1at10% f ort hr ee per i odsi s2. 49.Whati st hegai nonex t i ngui shmentf or2020? Res pons e:1, 703, 200 Scor e:1outof1Yes

Ques t i on2 Ther i ghtofus eass eti sr epor t edas Res pons e:Nonc ur r entassepar at el i nei t em Scor e:1outof1Yes

Ques t i on3 Att hebegi nni ngoft hecur r enty ear ,PowerCompanyent er edi nt oa10y ear nonc ancel abl el eas er equi r i ngy ear endpayment sofP1, 000, 000.Power ’ si ncr ement al bor r owi ngr at ei s12%,whi l et hel es sor ’ si mpl i c i ti nt er es tr at e,knownt oPower ,i s10%. Pr es entv al uef act or sf oranor di nar yannui t yf ort enper i odsar e6. 145at10% and5. 650 at12%.Ont hes amedat e,PowerCompanypai di ni t i al di r ectcos tofP200, 000i n negot i at i ngands ecur i ngt hel eas i ngar r angement .Owner shi poft hepr oper t yr emai ns wi t ht hel es soratexpi r at i onoft hel ease.Thel eas edpr oper t yhasanest i mat ed economi cl i f eof12y ear s.Whatamountshoul dbec api t al i z edasc ostoft her i ghtofuse as set ? Res pons e:6, 345, 000 Scor e:1outof1Yes

Ques t i on4 OnJ anuar y1,2020,Gr anadaCompanyhadanov er due10% not epay abl et oFi r s t BankatP8, 000, 000andac cr uedi nt er es tofP800, 000.Asar es ul tofar es t r uct ur i ng agr eementonJanuar y1,2020,Fi r stBankagr eedt ot hef ol l owi ngpr ov i s i ons : •Thepr i nc i pal obl i gat i oni sr educedt oP6, 000, 000 •Theacc r uedi nt er estofP800, 000i sf or gi v en •Thedat eofmat ur i t yi sext endedt oDecember31,2023 •Annual i nt er es tof12% i st obepai df or4y ear sev er yDecember31. Thepr es entv al ueof1at10% f or4per i odsi s0. 683andt hepr es entv al ueofan or di nar yannui t yof1at10% f or4per i odsi s3. 17.Whati st hepr esentv al ueoft henew not epay abl eonJanuar y1,2020? Res pons e:6, 380, 400

Scor e:1outof1Yes

Ques t i on5 Duet oex t r emefinanc i al di ffic ul t i es ,Ar madaCompanyhadnegot i at edar es t r uct ur i ngof a10% P5, 000, 000not epay abl edueonDecember31,2020.Theunpai di nt er es tont he not eons uchdat ewasP500, 000.Thec r edi t oragr eedt or educet hef aceamountt o P4, 000, 000,f or gi v et heunpai di nt er es t ,r educet hei nt er es tr at et o8% andext endt he duedaddt et hr eey ear sf r om December31,2020.Thepr es entv al ueof1at10% f or t hr eeper i odsi s0. 75andt hepr esentv al ueofanor di nar yannui t yof1at10% f ort hr ee per i odsi s2. 49.Whati st hei nt er es texpens ef or2021? Res pons e:379, 680 Scor e:1outof1Yes

Ques t i on6 OnJ anuar y1,2020,PowerCompanyr ec ei v edP1, 000, 000onanoni nt er es tbear i ng not eduei nt hr eey ear s.Themar k etr at eofi nt er es tonsuc hdat ei s10%.Theent i t y i r r ev ocabl yel ec t edt hef ai rv al ueopt i oni nmeas ur i ngt henot epay abl e.OnDecember 31,2020,t her i s kf ac t or si ndi cat edt hatt her at eofi nt er es tappl i cabl et ot hebor r owi ng was9%.Thepr es entv al uef act or sat10% and9% ar e:822 PVf act or10% 3per i ods=. 751 PVf act or10% 2per i ods=. 826 PVf act or10% 1per i od=. 909 PVf act or9%,3per i ods=. 772 PVf act or9%,2per i ods=. 842 PVf act or9%,1per i od=. 917 Whati st hei ni t i al car r y i ngamountoft henot epay abl eonJ anuar y1,2020? Respons e:751, 000 Scor e:1outof1Yes

Ques t i on7 Thegai norl os sf r om ex t i ngui s hmentofafinanc i al l i abi l i t ybyi s sui ngequi t yi nst r ument s i spr es ent edas Respons e:Separ at el i nei t em i nt hei ncomest at ement Scor e:1outof1Yes

Ques t i on8 Per r yCompanyboughtanewmachi neandagr eedt opayi nequal annual i ns t al l ment ofP600, 000att heendofeachoft henextfiv ey ear s .Thepr ev ai l i ngi nt er es tr at ef ort hi s t ypeoft r ans act i oni s12%.Thepr es entv al ueofOAof1at12% f orfi v eper i odsi s3. 60. t hef ut ur eamountofanor di nar yannui t yof1at12% f orfiv eper i odsi s6. 35.t hepr esent

v al ueof1at12% f orfiv eper i odsi s0. 567.Whatamountshoul dber epor t edasnot e pay abl ei ft hefinanc i al s t at ement swer epr epar edt oday ? Respons e:2, 160, 000 Scor e:1outof1Yes

Ques t i on9 Att hebegi nni ngoft hecur r enty ear ,PowerCompanyent er edi nt oa10y ear nonc ancel abl el eas er equi r i ngy ear endpayment sofP1, 000, 000.Power ’ si ncr ement al bor r owi ngr at ei s12%,whi l et hel es sor ’ si mpl i c i ti nt er es tr at e,knownt oPower ,i s10%. Pr es entv al uef act or sf oranor di nar yannui t yf ort enper i odsar e6. 145at10% and5. 650 at12%.Ont hes amedat e,PowerCompanypai di ni t i al di r ectcos tofP200, 000i n negot i at i ngands ecur i ngt hel eas i ngar r angement .Owner shi poft hepr oper t yr emai ns wi t ht hel es soratexpi r at i onoft hel ease.Thel eas edpr oper t yhasanest i mat ed economi cl i f eof12y ear s.Whati st hedepr ec i at i onf ort hec ur r enty ear ? Respons e:634, 500 Scor e:1outof1Yes

Ques t i on10 At r oubl eddebtr es t r uct ur i ngwi l l gener al l yr esul ti na Respons e:gai nbyt hedebt orandal ossbyt hec r edi t or . Scor e:1outof1Yes

Ques t i on11 Thedi ffer encebet weent hecar r yi ngamountoft hefinanc i all i abi l i t yex t i ngui shedand t hef ai rv al ueofequi t yi nst r ument si ss ueds hal l ber ecogni z edi n Respons e:Pr ofitorl os s Scor e:1outof1Yes

Ques t i on12 Thedi s countr es ul t i ngf r om t hedet er mi nat i onoft hepr es entv al ueofanot epay abl e s houl dber epor t edas Respons e:Di r ectdeduct i onf r om t hef aceamountoft henot e Scor e:1outof1Yes

Ques t i on13 Anent i t yshal li ni t i al l ymeas ur eequi t yi ns t r umenti ss uedt oext i ngui shafinanc i all i abi l i t y at Respons e:Fai rv al ueoft heequi t yi ns t r ument si ss ued

Scor e:1outof1Yes

Ques t i on14 Anot epay abl ewi t hnor eadymar k eti sex c hangedf orpr oper t ywhos ef ai rv al uei s c ur r ent l yi ndet er mi nabl e.Whensuc ht r ans act i ont ak espl ac e Respons e:Thepr es entv al ueoft henot epay abl emustbeappr oxi mat edus i ngan i mput edi nt er estr at e Scor e:1outof1Yes

Ques t i on15 Whi chst at ementi st r ueaboutl owv al uel eas e ? Respons e:Al l oft hes est at ement sar et r ueaboutl owv al uel eas e. Scor e:1outof1Yes

Ques t i on16 UnderI FRS,al es seei sr equi r edt or ecogni z e Respons e:Ri ghtofus eas setandl eas el i abi l i t y Scor e:1outof1Yes

Ques t i on17 OnJ anuar y1,2020,PowerCompanyr ec ei v edP1, 000, 000onanoni nt er es tbear i ng not eduei nt hr eey ear s.Themar k etr at eofi nt er es tonsuc hdat ei s10%.Theent i t y i r r ev ocabl yel ec t edt hef ai rv al ueopt i oni nmeas ur i ngt henot epay abl e.OnDecember 31,2020,t her i s kf ac t or si ndi cat edt hatt her at eofi nt er es tappl i cabl et ot hebor r owi ng was9%.Thepr es entv al uef act or sat10% and9% ar e: PVf act or10% 3per i ods=. 751 PVf act or10% 2per i ods=. 826 PVf act or10% 1per i od=. 909 PVf act or9%,3per i ods=. 772 PVf act or9%,2per i ods=. 842 PVf act or9%,1per i od=. 917 Whati st hecar r yi ngamountoft henot epay abl eonDec ember31,2020? Respons e:751, 000 Scor e:0outof1No

Ques t i on18 Att hebegi nni ngoft hecur r enty ear ,PowerCompanyent er edi nt oa10y ear nonc ancel abl el eas er equi r i ngy ear endpayment sofP1, 000, 000.Power ’ si ncr ement al bor r owi ngr at ei s12%,whi l et hel es sor ’ si mpl i c i ti nt er es tr at e,knownt oPower ,i s10%. Pr es entv al uef act or sf oranor di nar yannui t yf ort enper i odsar e6. 145at10% and5. 650

at12%.Ont hes amedat e,PowerCompanypai di ni t i al di r ectcos tofP200, 000i n negot i at i ngands ecur i ngt hel eas i ngar r angement .Owner shi poft hepr oper t yr emai ns wi t ht hel es soratexpi r at i onoft hel ease.Thel eas edpr oper t yhasanest i mat ed economi cl i f eof12y ear s.Whati st hel easel i abi l i t yatt heendoft hec ur r enty ear ? Respons e:5, 979, 500 Scor e:0outof1No

Ques t i on19 Thecos tofr i ghtofus eass etcompr i sesal l ,ex cept Respons e:Est i mat edcos tofdi s mant l i ng,r emov i ngorr es t or i ngt heunder l yi ngass etf or whi cht hel es s eehasnopr es entobl i gat i on Scor e:1outof1Yes

Ques t i on20 I nat r oubl eddebtr est r uc t ur i ng,t hel os sr ecogni z edbyt hecr edi t orwi l l equalt hegai n r ecogni z edbyt hedebt or . Respons e:Fal s e Scor e:1outof1Yes

Ques t i on21 Al es seewi t hal eas ec ont ai ni ngapur chas eopt i ont hati sr easonabl ycer t ai nt obe ex er c i sedshoul ddepr ec i at et her i ghtofuseass etov er Respons e:Usef ull i f eoft heass et Scor e:1outof1Yes

Ques t i on22 Thel es seemayappl yt heoper at i ngl eas emodel underwhatc ondi t i on? Respons e:Bot hshor t t er ml eas eandl owv al uel eas e Scor e:1outof1Yes

Ques t i on23 Whenanot epay abl ei si ss uedf orpr oper t y ,t hepr es entv al ueoft henot ei smeas ur ed by Respons e:Al l oft hes ear econs i der edi nmeas ur i ngt hepr es entv al ueoft henot e pay abl e Scor e:1outof1Yes

Ques t i on24

Thef ol l owi ngi nf or mat i onper t ai nst ot het r ansf erofr eal es t at epur suantt oadebt r es t r uct ur i ngbyKnobCompanyt oMeneCompanyi nf ul l l i qui dat i onofKnobCompany ’ s l i abi l i t yt oMeneCompany :car r y i ngamountofl i abi l i t yl i qui dat ed=1, 500, 000;car r yi ng amountofr eal es t at et r ans f er r ed=1, 000, 000;Fai rv al ueofr eal es t at et r ans f er r ed= 1, 200, 000.Whatamountofpr et axgai nonext i ngui shments houl dKnobCompanyr epor t ascomponentofi ncomef r om cont i nui ngoper at i ons ? Respons e:500, 000 Scor e:1outof1Yes

Ques t i on25 I fal ongt er m not epay abl ehasas t at edi nt er es tr at e,t hatr at eshoul dbecons i der edt o bet heeffec t i v er at e. Respons e:Fal s e Scor e:1outof1...