5-24. For each of the following cases, determine the amount of the notes payable reported as current and non-current at

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5 24 For Each Of The Following Cases Determine The Amount Of The Notes Payable Reported As Current And Non Current At 1 (136 KiB) Viewed 62 times

5-24. For each of the following cases, determine the amount of the notes payable reported as current and non-current at December 31, 2020. Case 1 Taft, Inc. has P3 million of notes payable due June 15, 2021. At December 31, 2020, Taft signed an agreement to borrow up to P3 million to refinance the notes payable on a long-term basis. The financing agreement called for borrowings not to exceed 80% of the value of the collateral Taft was providing. At the date of issue of the December 31, 2020 financial statements, the value of the collateral was P3.6 million and was not expected to fall below this amount. 260 Scanned with CamScanner Chapter 5 - Financial Liabilities Case 2 Taft, Inc. has P2 million i noves payable due June 15, 2021. At February 15, 2021, Taft signed an agreement to borrow up to P2 million to refinance the notes payable on a long-term basis. The financing agreement called for borrowings not to exceed 80% of the value of the collateral Tait was providing the value of the collateral was P2.4 million and was not expected to fall below The financial statements are authorized for this amount. issuance on March 5, 2021. Case 3 Situation A. In October 2018, Wilson Corporation acquired land from Woodrow, Inc. by paying P1,000,000 down and signing a note with a maturity value of P6 million due October 31, 2020. Under the terms of the financing agreement, Wilson has the discretion to roll over the obligation for at least twelve months. In October 2020, management decides to exercise its discretion to extend the maturity date of its obligation to December 31, 2021. Situation B. Under the terms of the financing agreement, Wilson has the discretion to roll over the obligation for at least twelve months. In October 2020 management decides to exercise its discretion to extend the maturity date of its obligation to December 31, 2022.
Situation C. The existing loan agreement does not carry a provision to refinance. In October 2020, Wilson was experiencing financial difficulty and was unable to pay the maturing obligation. On February 1, 2021, Woodrow has agreed not to demand payment for at least 12 months as a consequence of the breach of payment on the principal of the loan. The financial statements were authorized for issue on March 31, 2021. Situation D. The existing loan agreement does not carry a provision to refinance. In October 2020, Wilson was experiencing financial difficulty and was unable to pay the maturing obligation. On December 31, 2020, Woodrow signed an agreement to provide Wilson a grace period of 15 months from that date, during which period, Woodrow will not demand immediate payment in order to give Wilson the chance to rectify the breach. The financial statements were authorized for issue on March 31, 2021.