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East corp a calendar year company had sufficient

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5.East Corp., a calendar-year company, had sufficientretained earnings in 2020 as a basis for dividends, butwas temporarily short of cash.East declared adividend of P100,000 on April 1, 2020, and issuedpromissory notes to its shareholders in lieu of cash.The notes, which were dated April 1, 2020, had amaturity date of March 31, 2021, and a 10% interestrate.How should East account for the scrip dividendand related interest?a.Debit retained earnings for P110,000 on April 1,2020.b.Debit retained earnings for P110,000 on March 31,2021.c.Debit retained earnings for P100,000 on April 1,2020, and debit interest expense for P10,000 onMarch 31, 2021.d.Debit retained earnings for P 100,000 on April 1,2020, and debit interest expense for P7,500 onDecember 31, 2020.6.Lett Corp. declared and issued a 15% share dividend.Prior to this dividend, Lett had 100,000, P1 par value,ordinary shares issued and outstanding.The fair valueof Lett's ordinary share was P20 per share on the dateof declaration.As a result of this share dividend, Lett'sretained earningsa.increased by P300,000.
b.decreased by P300,000.c.decreased by P15,000.d.didnotchange.
7.Which statement is incorrect regarding IFRIC 17Distribution of Non-cash Assets to Owners?as
d.It addresses the accounting by shareholders whoreceive such a distribution.8.In accordance with IFRIC 17, when an entity settlesthe dividend payable, it shall recognize the difference,if any, between the carrying amount of the assetsdistributed and the carrying amount of the dividendpayable

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Term
Fall
Professor
daganta
Tags
Balance Sheet, professional services

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