Question 2 Nero Inc sells used machinery to Buyer Ltd. Buyer takes possession of the truck on October 1, 20X0 in exchange for a zero-interest bearing loan of $30,000 payable to Nero. The book value of the machinery is $25,000 (Cost = 60,000; Accumulated depreciation = 35,000). Settlement of the loan will take place on March 31, 20X2. Buyer's normal borrowing rate is 5% (i.e. Ioan will yield 7.5%; n=1; i=7.5%). Nero’s fiscal %3D %3D year end is December 31. Required: What will Nero report on its annual financial statements for the Loan Receivable (including the loan balance, interest receivable, interest Income, and gain/loss on sale of machinery) at December 31, 20X0 and December 31, 20X1?

Question 2 Nero Inc sells used machinery to Buyer Ltd. Buyer takes possession of the truck on October 1, 20X0 in exchange for a zero-interest bearing loan of $30,000 payable to Nero. The book value of the machinery is $25,000 (Cost = 60,000; Accumulated depreciation = 35,000). Settlement of the loan will take place on March 31, 20X2. Buyer's normal borrowing rate is 5% (i.e. Ioan will yield 7.5%; n=1; i=7.5%). Nero’s fiscal %3D %3D year end is December 31. Required: What will Nero report on its annual financial statements for the Loan Receivable (including the loan balance, interest receivable, interest Income, and gain/loss on sale of machinery) at December 31, 20X0 and December 31, 20X1?

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 23P: Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to...

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Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to Mark Company. Mark signed a 180,000 non-interest-bearing note, payable in three 60,000 annual installments on December 31, 2019, 2020, and 2021. The fair value of the machinery was 149,211.12 on the date of sale. The machinery had been purchased by Lisa at a cost of 160,000. Required: 1. Prepare all the journal entries on Lisas books for January 1, 2019, through December 31, 2021. 2. Prepare the notes receivable portion of Lisas balance sheet on December 31, 2019 and 2020.
Comprehensive Notes Receivable On January 1, 2019, Seaver Company sold land with a book value of 23,000 to Bench Company. Bench paid 15,000 down and signed a 15,000 non-interest-bearing note, payable in two 7,500 annual installments on December 31, 2019, and 2020. Neither the fair value of the land nor of the note is determinable. Benchs incremental borrowing rate is 12%. Later in the year, on July 1, 2019, Seaver sold a building to Hane Company, accepting a 2-year, 100,000 non-interest-bearing note due July 1, 2021. The fair value of the building was 82,644.00 on the date of the sale. The building had been purchased at a cost of 90,000 on January 1, 2014, and had a book value of 67,500 on December 31, 2018. It was being depreciated on a straight-line basis (no residual value) over a 20-year life. Required: 1. Prepare all the journal entries on Seavers books for January 1, 2019, through December 31, 2020, in regard to the Bench note. 2. Prepare all the journal entries on Seavers books for July 1, 2019, through July 1, 2021, in regard to the Hane note. 3. Prepare the notes receivable portion of Seavers balance sheet on December 31, 2019 and 2020.
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