On February 1st, 2021, Seen This Before Inc. (STB) accepted a non-interest-bearing note from its customer Dolon Inc for services rendered. All services had been completed on February 1st, 2021, and they also meet the criteria for revenue recognition. The total amount of the note was $500,000 and was to be paid in full on February 1st, 2024. Dolan's typical borrowing rate is 5%. and paid the note in full on the due date. The present value of the note on February 1st, 2021, is: $431,920. STB and Dolon Inc both follow IFRS.

On February 1st, 2021, Seen This Before Inc. (STB) accepted a non-interest-bearing note from its customer Dolon Inc for services rendered. All services had been completed on February 1st, 2021, and they also meet the criteria for revenue recognition. The total amount of the note was $500,000 and was to be paid in full on February 1st, 2024. Dolan's typical borrowing rate is 5%. and paid the note in full on the due date. The present value of the note on February 1st, 2021, is: $431,920. STB and Dolon Inc both follow IFRS.

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 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...

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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
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
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