East corp a calendar year company had sufficient

5. East Corp., a calendar-year company, had sufficient
retained earnings in 2020 as a basis for dividends, but
was temporarily short of cash. East declared a
dividend of P100,000 on April 1, 2020, and issued
promissory notes to its shareholders in lieu of cash.
The notes, which were dated April 1, 2020, had a
maturity date of March 31, 2021, and a 10% interest
rate. How should East account for the scrip dividend
and 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 on
March 31, 2021.
d. Debit retained earnings for P 100,000 on April 1,
2020, and debit interest expense for P7,500 on
December 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 value
of Lett's ordinary share was P20 per share on the date
of declaration. As a result of this share dividend, Lett's
retained earnings
a. increased by P300,000.
b. decreased by P300,000.
c. decreased by P15,000.
d. did not change.
7. Which statement is incorrect regarding IFRIC 17
Distribution of Non-cash Assets to Owners ?
as
d. It addresses the accounting by shareholders who
receive such a distribution.
8. In accordance with IFRIC 17, when an entity settles
the dividend payable, it shall recognize the difference,
if any, between the carrying amount of the assets
distributed and the carrying amount of the dividend
payable