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JARD-REF3-L-NONCURRENTLIAB
-ADAMSON UNIVERSITY- Page 1 of 1
ACCOUNTING FOR NON-CURRENT LIABILITIES
Convertible Bonds Bonds that give the shareholder the right to convert their
holdings into ordinary shares or other securities of theissuing company.
Proceeds from the issuance of convertible bonds compriseof two components: a financial liability (bond) and anequity instrument (bond conversion privilege).
The value assigned to the conversion privilege isdetermined using the intrinsic value method, computingfirst the fair value of a similar liability without an attachedequity component. The excess of the issue price over thethe fair value of the financial liability represents thecarrying amount of the equity component.
Cash xxDiscount on Bonds Payable* xx
Bonds Payable xxPremium on Bonds Payable* xxPaid in Capital Arising from
Bond Conversion Privilege xx
Upon conversion of the bond privilege, the carrying valueof the debt converted is the value assigned to the ordinaryshares issued in exchange. Hence, no gain or loss isrecognized upon conversion.
Bonds Payable xxPaid in Capital Arising fromBond Conversion Privilege xx
Premium on Bonds Payable* xxDiscount on Bonds Payable* xxShare Capital - Ordinary xxShare Premium - Ordinary xx
When bonds are retired prior to maturity, the retirementprice is allocated to the debt or liability settled and theequity portion of the bond conversion privilege.
Bonds Payable xxLoss on Retirement of Bonds* xxPremium on Bonds Payables* xxPaid in Capital Arising fromBond Conversion Privilege xx
Gain on Retirement of Bonds xxDiscount on Bonds Payable xxCash xxPaid in Capital from UnexercisedBond Conversion Privilege xx
TROUBLED DEBT RESTRUCTURING ASSET SWAP
Non-cash assets are used to settle the obligation. Again or loss on extinguishment of debt is recognizedby the debtor equal to the difference of the carryingvalue of the asset versus the carrying value of theliability.
Under PFRS 9Notes Payable xxInterest Payable xxLoss on Extinguishment of Debt* xx
Discount on Notes Payable* xxNon-Cash Asset xxGain on Extinguishment of Debt xx
Under US GAAPGain or loss on exchange is recognized as the differencebetween the carrying value and fair value of the asset. Asidefrom that, gain or loss on extinguishment of debt is recognizedas the difference between the carrying value of the debt andthe fair value of the asset.
Notes Payable xxInterest Payable xxLoss on Extinguishment of Debt* xxLoss on Exchange* xx
Discount on Notes Payable* xxNon-Cash Asset xxGain on Extinguishment of Debt* xxLoss on Exchange* xx
EQUITY SWAP The debtor issues its own shares to settle the
obligation. The equity instruments issued shall bemeasured according to its (1) fair value, (2) fair valueof the liability, or (3) carrying amount of the liability.
Bonds Payable xxAccrued Interest xxLoss on Extinguishment of Debt* xx
Share Capital - Ordinary xxShare Premium - Ordinary xxGain on Extinguishment of Debt* xx
MODIFICATION OF TERMS Substantial modification of terms may be brought
about by a reduction of interest rate, reduction orcondonation of accrued interest, or reduction ofprincipal amount, extension of maturity date.
Notes Payable - old xxInterest Payable xxLoss on Extinguishment of Debt* xx
Notes Payable - new xxGain on Extinguishment of Debt* xx