At the end of December 200A, how much is the amount of income ABC should reflect in its statement of financial performance?
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On January 1, 200A, ABC rendered services to XYZ. There is no established selling price for the services yet. ABC received a non-interest bearing P500,000 5-year promissory note from XYZ to be paid in full on December 200E. The market interest rate in the market for instrument with similar characteristics of the instrument held is 9%.
At the end of December 200A, how much is the amount of income ABC should reflect in its statement of financial performance?
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- On January 1, Kilgore Inc. accepts a 20,000 non-interest-bearing, 5-year note from Dieland Company for equipment. Neither the fair value of the note nor the equipment is determinable. Kilgore had originally purchased the equipment for 18,000, and the equipment has a book value of 14,000 on January 1. Kilgore knows Dielands incremental borrowing rate of 9%. Prepare the journal entry for Kilgore to record the sale of the equipment on January 1.On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
- Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the: a. income statement at 12,000 b. income statement at 8,400 (net of 3,600 income taxes) c. retained earnings statement at 12,000 d. retained earnings statement at 8,400 (net of 3,600 income taxes)
- On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.On January 1, 200A, ABC rendered services to XYZ. There is no established selling price for the services yet. ABC received a non-interest bearing P500,000 5-year promissory note from XYZ to be paid in full on December 200E. The market interest rate in the market for instrument with similar characteristics of the instrument held is 9%. At the end of December 200B, the carrying value of the note receivable isOn January 1, 2021, Janelle Co. sold equipment to James Inc. in exchange for a zero-interest bearing note with a face value of $110,000, with payment due in 12 months. The fair value of the equipment on the date of the sale was $100,000. Janelle paid $55,000 for the cost of equipment. Record the journal entries for January 1, 2021 What is the amount of revenue to be recognized on this transaction at December 31, 2021?
- On January 1, 2020, Uniform Co. sold its 2-year old equipment to XYZ Inc. for a cash down-payment of P100,000 and a non-interest bearing note with a face amount of P900,000 due December 31, 2021. There is no established price for the equipment but its carrying amount on the company's books was at P600,000. The prevailing market rate of interest for similar note of this type on the transaction date was at 10%. On December 31, 2020 XYZ developed a financial difficulty and it was apparent that it will no longer be able to settle the amount due on December 31, 2021. To maximize the recovery of the note, Uniform agreed to extend the maturity of the note to up to December 31, 2022. Furthermore, Uniform also agreed to reduce the principal amount by 25% How much is the impairment loss to be recognized on the note in 2020?On January 1, 2021, Janelle Co. sold equipment to James Inc. in exchange for a zero-interest bearing note with a face value of $110,000, with payment due in 12 months. The fair value of the equipment on the date of the sale was $100,000. Janelle paid $55,000 for the cost of equipment. A. Record the journal entries for January 1, 2021 B. What is the amount of revenue to be recognized on this transaction at December 31, 2021?On January 1, 2020, ABC Company sold property to the DEF Company. There was no established exchange price for the property, and DEF gave ABC a P2,000,000 non-interest bearing note payable in 5 equal annual installments of P400,000, with the first payment due December 31, 2020. The prevailing rate of interest for a note of this type is 9%.What should be the balance of the Discount on Notes Payable account on the books of DEF at December 31, 2021 after adjusting entries are made assuming that the effective interest method is used? A. 0 B. 444,139.49 C.187,482.13 D. 304,112.05
