Question: Problem 1: At December 31, 2014, Ulysses Companys liabilities include the following: a. Php 10,000,000 of 10% notes are due on March 31, 2019. The

Problem 1: At December 31, 2014, Ulysses Companys liabilities include the following: a. Php 10,000,000 of 10% notes are due on March 31, 2019. The financing agreement contains a covenant that requires Ulysses to maintain current assets at least equal to 200% of its current liabilities. As of December 31, 2014, Ulysses has breached this loan covenant. On February 10, 2015 before Ulysses financial statements are authorized for issue, Ulysses obtained a period of grace from Mayumi bank until January 31, 2016, having convinced the bank that the companys normal 3 to 1 ratio of current assets to current liabilities will be reestablished during 2015. b. Php 15,000,000 of noncancelable 12% bonds were issued at face value on September 30, 1993. The bonds mature on August 31, 2015. Ulysses expects to have sufficient cash available to redeem the bonds at maturity. c. Php 20,000,000 of 10% bonds were issued at face value on June 30, 1995. The bonds mature on June 30, 2024, but bondholders gave the option to call the bonds on June 30, 2015. However, the call option is not expected to be exercised, given prevailing market conditions. Required: 1. What portion of Ulysses Companys debt should be reported as a noncurrent liability?

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Problem2 : PAMINE Company enters into lease agreement with Lessor Co. on July 1, 2019, to lease a machine to be used in its manufacturing operations. The term of the non cancelable lease is 3 years, with no renewal operation and no residual value at the end of the lease term. Payments of Php 212,024 are due on July 1 of each year, beginning July 1, 2019. The fair value of the machine on July 1, 2019 is Php 620,000. The machine has a remaining economic life of 5 years, with no salvage value. The machine reverts to the lessor upon the termination of the lease. PAMINE Company elects to depreciate the machine on the straight line method. The interest rate implicit in the lease is 10% Required: 2. How much lease liability should be recognized by PAMINE Company at the beginning of the lease contract?

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