Michek Company loans Sarasota Company $2,000,000 at 6% for 3 years on January 1, 2020. Michek intends to hold this loan to maturity and has the financial ability to do so. The fair value of the loan at the end of each reporting period is as follows. December 31, 2020 $2,050,000 December 31, 2021 2,020,000 December 31, 2022 2,000,000 Prepare the journal entry(ies) at December 31, 2020, and December 31, 2022, for Michek related to these bonds, assuming (a) it does not use the fair value option, and (b) it uses the fair value option. Interest is paid on January 1.
Michek Company loans Sarasota Company $2,000,000 at 6% for 3 years on January 1, 2020. Michek intends to hold this loan to maturity and has the financial ability to do so. The fair value of the loan at the end of each reporting period is as follows. December 31, 2020 $2,050,000 December 31, 2021 2,020,000 December 31, 2022 2,000,000 Prepare the journal entry(ies) at December 31, 2020, and December 31, 2022, for Michek related to these bonds, assuming (a) it does not use the fair value option, and (b) it uses the fair value option. Interest is paid on January 1.
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
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 30E
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Michek Company loans Sarasota Company $2,000,000 at 6% for 3 years on January 1, 2020. Michek intends to hold this loan to maturity and has the financial ability to do so. The fair value of the loan at the end of each reporting period is as follows.
| December 31, 2020 | $2,050,000 | |
| December 31, 2021 | 2,020,000 | |
| December 31, 2022 | 2,000,000 |
Prepare the
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