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.

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.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 10RE: On September 30, Franz Corporation notices a decline in value of its investment in held-to-maturity...

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On September 30, Franz Corporation notices a decline in value of its investment in held-to-maturity bonds. On that date, the carrying value of the bonds is 38,500 and the fair value is 22,980. Franz evaluation of this investment reveals that expected credit losses are 10,000. Prepare the journal entry to record the impairment.
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. 36,000
Indigo Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 12% and has a carrying value of $15,000. At year-end, Indigo’s borrowing rate (credit risk) has declined; the fair value of the note payable is now $16,200. (a) Determine the unrealized holding gain or loss on the note.
Indigo Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 12% and has a carrying value of $15,000. At year-end, Indigo’s borrowing rate (credit risk) has declined; the fair value of the note payable is now $16,200.
Shonen Knife Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 11% and has a carrying value of $16,000. At year-end, Shonen Knife's borrowing rate (credit risk) has declined; the fair value of the note payable is now $17,500. (a) Determine the unrealized holding gain or loss on the note. (b) Prepare the entry to record any unrealized holding gain or loss.
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On July 31, 2021, Sampaguita Company borrowed from a bank via issuing a 13.5% note. Transaction costs of P40,000 related to the borrowing was paid. The note was irrevocably designated at fair value for measuring purposes. Analyzing the changes in the fair value at yearend, P20,000 was attributable to credit risk.The net effects of the note are the following: P276,250 loss for the 2021 Income Statement and P256,250 loss on the 2021 Statement of Comprehensive Income. How much is the fair value of the note at yearend 2021?
On July 31, 2021, Sampaguita Company borrowed from a bank via issuing a 13.5% note. Transaction costs of P40,000 related to the borrowing was paid. The note was irrevocably designated at fair value for measuring purposes. Analyzing the changes in the fair value at yearend, P20,000 was attributable to credit risk.The net effects of the note are the following: P276,250 loss for the 2021 Income Statement and P256,250 loss on the 2021 Statement of Comprehensive Income. How much is the face value of the note?
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On December 31, 2020, Iva Majoli Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-bearing note. The note was issued to yield 10% interest. Unfortunately, during 2022, Majoli began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would receive back only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%. Instructions a.    Prepare the entry to record the issuance of the loan by Paris Bank on December 31, 2020. b.    Prepare the entry, if any, to record the impairment of the loan on December 31, 2022, by Paris Bank.