Marigold Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 10% and has a carrying value of $15,000. At year-end, Marigold’s borrowing rate (credit risk) has declined; the fair value of the note payable is now $16,300.Determine the unrealized holding gain or loss on the note.Prepare the entry to record any unrealized holding gain or loss.

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Asked Nov 28, 2019
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Marigold Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 10% and has a carrying value of $15,000. At year-end, Marigold’s borrowing rate (credit risk) has declined; the fair value of the note payable is now $16,300.

Determine the unrealized holding gain or loss on the note.

Prepare the entry to record any unrealized holding gain or loss.

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Determine unrealized hold...

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Unrealized holding gain or loss Carrying value - Fair value at the end of the year Unrealized holding gain or loss $15,000 - $16,300 Unrealized holding loss = - $1,300 Therefore, the unrealized holding loss of $1,300 on the note

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