By December 31, 2017, Culver Corporation had performed a significant amount of environmental consulting services for Sunland Company. Sunland Company was short of cash, and Culver Corporation agreed to accept a $182,000, non–interest-bearing note due December 31, 2019, as payment in full. Sunland Company is a bit of a credit risk and typically borrows funds at a rate of 12%. Culver Corporation is much more creditworthy and has various lines of credit at 8%. Culver Corporation reports under IFRS. The tables in this problem are to be used as a reference for this problem. Prepare the journal entry to record the transaction on December 31, 2017, for Culver Corporation. Assuming Culver Corporation’s fiscal year end is December 31, prepare the journal entry required at December 31, 2018. Assuming Culver Corporation’s fiscal year end is December 31, prepare the journal entry required at December 31, 2019. What are the amount and classification of the note on Culver Corporation’s statement of financial position as at December 31, 2018? Assume instead that Culver Corporation reports under ASPE and uses the straight-line method to amortize the discount on the note. What would the interest income be relating to the note for 2018 and 2019?

Question

By December 31, 2017, Culver Corporation had performed a significant amount of environmental consulting services for Sunland Company. Sunland Company was short of cash, and Culver Corporation agreed to accept a $182,000, non–interest-bearing note due December 31, 2019, as payment in full. Sunland Company is a bit of a credit risk and typically borrows funds at a rate of 12%. Culver Corporation is much more creditworthy and has various lines of credit at 8%. Culver Corporation reports under IFRS. The tables in this problem are to be used as a reference for this problem.

Prepare the journal entry to record the transaction on December 31, 2017, for Culver Corporation.

Assuming Culver Corporation’s fiscal year end is December 31, prepare the journal entry required at December 31, 2018.

Assuming Culver Corporation’s fiscal year end is December 31, prepare the journal entry required at December 31, 2019.

What are the amount and classification of the note on Culver Corporation’s statement of financial position as at December 31, 2018?

Assume instead that Culver Corporation reports under ASPE and uses the straight-line method to amortize the discount on the note. What would the interest income be relating to the note for 2018 and 2019?

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