On December 31, 2012, Grin Company finished consultation services and accepted inexchange a promissory note with a face value of P600,000, a due date of December 31, 2015,and a stated rate of 5%, with interest receivable at the end of each year. The fair value of theservices is not readily determinable and the note is not readily marketable. Under thecircumstances, the note is considered to have an appropriate imputed rate of interest of 10%.The following interest factors are provided:Interest RateTable Factors For Three Periods10%1.33100.751325%Future Value of 11.15763Present Value of 1.86384Future Value of Ordinary Annuity of 1Present Value of Ordinary Annuity of 13.152503.310002.723252.48685Instructions(a) Determine the present value of the note.(b) Prepare a Schedule of Note Discount Amortization for Green Company under the effectiveinterest method. (Round to whole dollars.)

Consultation Services are a very important in business perspective point of view. Basically in…

Answered: On December 31, 2012, Grin Company…

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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On 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
Element Surfboards issued a $210,800 note on January 1, 2018 to a customer, Leona Marland, in exchange for merchandise. Terms of the note are 9-month maturity date on October 1, 2018 at a 10.2% annual interest rate. Leona Marland does not pay on her account and dishonors the note. On December 2, 2018, Element Surfboards decides to sell the dishonored note to a collection agency for 30% of its value. Record the journal entries for Element Surfboards for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on October 1, 2018 C. Receivable sale on December 2, 2018
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
On December 31,2021, LBJ company finished consultation services and accepted in exchange a promissory note with a face value of P200,000, a due date of December 31,2024 and a started rate of 5%, with interest receivable at the end of the each year. The fair value of the service is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%. What is the amortized cost of the note on December 31,2022? P 175,131 P182,645 P190,909 P200,000
On January 1, 2023, Green Company finished consultation services and accepted in exchange a promissory note with a face value of $600,000, a due date of January 1, 2026, and a stated rate of 4%, with interest receivable at the beginning of each year (the first interest will be received on January 1, 2024). The fair value of the services is not easily determined and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%. The company has a fiscal year-end of December 31. Required: a) Calculate the present value of the note, using a financial calculator. b) Prepare a Schedule of Note Discount Amortization for Green Company under the effective interest method. (Round to whole dollars) c) Prepare the journal entries for 2023. Plz answer fast i give up vote
SOSKE Company finished consultation services and accepted in exchange a promissory note with a face value of P200,000, a due date of December 31, 2020, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%. The following interest factors are provided: Interest Rate Table Factors for Three Period 5% 10% Future value of 1 1.15763 1.33100 Present value of 1 0.86384 0.75132 Future value of ordinary 3.15250 3.31000 annuity of 1 Present value of ordinary 2.72325…
655. On December 31, 2010, Green Company finished consultation services and accepted inexchange a promissory note with a face value of P300,000, a due date of December 31, 2013,and a stated rate of 5%, with interest receivable at the end of each year. The fair value of theservices is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%The carrying amount of the note receivable as of December 31, 2020 isa. 262,694b. 247,920c. 300,000d. 273,953
Grant Corp. has elected to use the fair value option for long-term notes it issues to finance portions of its business. At December 31, 2020 the unadjusted carrying value of Grant Corp's long-term notes payable was $375,000. The fair value of the notes was $405,000. The difference was due to chantges in market interest rates, not credit risk. Which of the following is the correct journal entry to adjust the notes to fair value?
During 2020 Hingalo Company experienced financial difficulties and is likely to default on a P500,000, 15%, three-year note dated January 1, 2019, payable to Maawain National Bank. On December 31, 2020, the bank agrees to settle the note and unpaid interest of P75,000 for 2020 for P50,000 cash and marketable securities carried at P385,000. What amount should Hingalo report as a gain from extinguishment of debt in its 2020 income statement?
On December 31, 2020, Pronghorn Company signed a $1,284,300 note to Stellar Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Pronghorn’s financial situation worsened. On December 31, 2022, Stellar Bank determined that it was probable that the company would pay back only $770,580 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,284,300 loan. Determine the amount of cash Pronghorn received from the loan on December 31, 2020. (Round present value factors to 5 decimal places, e.g. 0.52513 and final answer to 0 decimal places, e.g. 5,275.)
On December 31, 2021, LOL Company is experiencing extreme financial pressure and is in default in meeting interest payment on its long-term note of P7,000,000 due on December 31, 2021. The interest rate is 10% payable every December 31. In an agreement with the creditor, LOL obtained the following changes in the terms of the note: * The accrued interest of P700,000 on December 31, 2021 is forgiven. The principal is reduced by P1,000,000. * The new interest rate is 8%. The new date of maturity is December 31, 2026. At the time of restructuring, the market rate of interest was 10%. What is LOL Company's gain on debt restructuring?
On December 31, 2020, Stellar Company signed a $ 1,022,000 note to Pearl Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Stellar’s financial situation worsened. On December 31, 2022, Pearl Bank determined that it was probable that the company would pay back only $ 613,200 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $ 1,022,000 loan.

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