Reference no: EM132924270

Questions -

Q1. On 1 January 2021, Sideshow sold a property for its fair value of RM2 million, transferring title to the property on that date Sideshow then leased it back under a 5-year lease, paying RM150,000 per annum on 31 December each year The present value of rentals payable was RM599,000 and the interest rate implicit in the lease was 8%. The carrying amount of the property on 1 January 2021 was RM1.6 million and it had a remaining useful life of 20 years. What entries would be made in Sideshow's statement of profit or loss for the year ended 31 December 2021?

a. Profit on disposal of RM280,200, depreciation of RM119,800, finance cost of RM47,920

b. Profit on disposal of RM400,000, depreciation of RM95,840, finance cost of RM47,920

c. Profit on disposal of RM280,200, depreciation of RM95,840, finance cost of RM47,920

d. Profit on disposal of RM400,000, rental expense of RM150,000

Q2. On November 3, 2020, AOC issued $400,000 of 8% bonds at 103. Attached to each $1,000 bond are 10 detachable stock warrants. On the issuance date, the bonds without the warrants sell in the market at 98 per bond.

Instructions:

a. Use the appropriate method to allocate the proceeds from the bond issuance, and prepare the journal entry to record the issuance.

b. The warrants entitle the holder to purchase one share of $2 par value common stock at $9. When the price of the stock equals $24, all warrants are exercised. Prepare the journal entry to record the exercise of the warrants.