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AccountingCornerstones of Financial Accounting4th Edition

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Chapter 11, Problem 63.4C
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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 11DQ
Problem 12DQ
Problem 13DQ
Problem 14DQ
Problem 15DQ
Problem 16DQ
Problem 17DQ
Problem 18DQ
Problem 19DQ
Problem 20DQ
Problem 21DQ
Problem 22DQ
Problem 23DQ
Problem 24DQ
Problem 1MCQ
Problem 2MCQ
Problem 3MCQ
Problem 4MCQ
Problem 5MCQ
Problem 6MCQ
Problem 7MCQ
Problem 8MCQ
Problem 9MCQ
Problem 10MCQ
Problem 11MCQ
Problem 12MCQ
Problem 13MCQ
Problem 14CE
Problem 15CE
Problem 16CE
Problem 17CE
Problem 18CE
Problem 19CE
Problem 20CE
Problem 21CE
Problem 22CE
Problem 23CE
Problem 24CE
Problem 25CE
Problem 26BE
Problem 27BE
Problem 28BE
Problem 29BE
Problem 30BE
Problem 31BE
Problem 32BE
Problem 33BE
Problem 34E
Problem 35E
Problem 36E
Problem 37E
Problem 38E
Problem 39E
Problem 40E
Problem 41E
Problem 42E
Problem 43E
Problem 44E
Problem 45E
Problem 46E
Problem 47E
Problem 48E
Problem 49E
Problem 50E
Problem 51E
Problem 52PSA
Problem 53PSA
Problem 54PSA
Problem 55PSA
Problem 56PSA
Problem 57PSA
Problem 58PSA
Problem 59PSA
Problem 52PSB
Problem 53PSB
Problem 54PSB
Problem 55PSB
Problem 56PSB
Problem 57PSB
Problem 58PSB
Problem 59PSB
Problem 60.1C
Problem 60.2C
Problem 60.3C
Problem 61.1C
Problem 61.2C
Problem 61.3C
Problem 61.4C
Problem 62.1C
Problem 62.2C
Problem 62.3C
Problem 63.1C
Problem 63.2C
Problem 63.3C
Problem 63.4C
Problem 64.1C
Problem 64.2C
Problem 65.1C
Problem 65.2C
Problem 65.3C
Problem 65.4C
Problem 65.5C
Problem 65.6C
Problem 65.7C
Problem 65.8C
Problem 66.1C
Problem 66.2C
Problem 66.3C
Problem 66.4C
Problem 66.5C
Problem 67.1C
Problem 67.2C
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
1 views

Income, Cash Flow, and Future Losses

On January L 2017, Cermack National Bank loaned 55,000,000 under a 2-year, zero coupon note to a real estate developer. The bank recognized interest revenue on this note of approximately $400,000 per year. Due to an economic downturn, the developer was unable to pay the $5,800,000

maturity amount on December 31, 2018. The bank convinced the developer to pay $800,000 on December 31, 2018, and agreed to extend $5,000,000 credit to the developer despite the gloomy economic outlook for the next several years. Thus, on December 31, 2018, the bank issued a new 2-year, zero coupon note to the developer to mature on December 31, 2020, for $6,000,000. The bank recognized interest revenue on this note of approximately $500,000 per year.

The bank’s external auditor insisted that the riskiness of the new loan be recognized by increasing the allowance for uncollectible notes by $1,500,000 on December 31, 2018, and $2,000,000 on December 31, 2019. On December 31, 20201 the bank received $1,200,000 from the developer and learned that the developer was in bankruptcy and that no additional amounts would be recovered.

Required:

A commonly used method for predicting future cash flows is to predict future income and adjust it for anticipated differences between net income and net cash How. Does the Cermack National Bank case shed any light on the justification for using net income in this way rather than simply predicting future cash flows by reference to past cash flows?

To determine

The contrast between net income and net cash flow. Net income is the incomes perceived in an announcing period, less the costs perceived in a similar period.

Net cash flow is determined by deciding changes in closure cash adjusts from period to period, and isn’t affected by the accrual basis of bookkeeping.

To discuss:

Does the bank use net income in this way rather than simply predicting future cash flow by reference to past cash flows?

Explanation

The statement of cash flow demonstrates how an organization spends its (cash outflows) and from where an organization gets its cash inflows. The cash flow statement incorporates all cash inflows an organization gets from its continuous tasks and outsi...

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Chapter 11,
Problem 63.3C
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Problem 64.1C
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Ch-11 P-1DQCh-11 P-2DQCh-11 P-3DQCh-11 P-4DQCh-11 P-5DQCh-11 P-6DQCh-11 P-7DQCh-11 P-8DQCh-11 P-9DQCh-11 P-10DQ
Ch-11 P-11DQCh-11 P-12DQCh-11 P-13DQCh-11 P-14DQCh-11 P-15DQCh-11 P-16DQCh-11 P-17DQCh-11 P-18DQCh-11 P-19DQCh-11 P-20DQCh-11 P-21DQCh-11 P-22DQCh-11 P-23DQCh-11 P-24DQCh-11 P-1MCQCh-11 P-2MCQCh-11 P-3MCQCh-11 P-4MCQCh-11 P-5MCQCh-11 P-6MCQCh-11 P-7MCQCh-11 P-8MCQCh-11 P-9MCQCh-11 P-10MCQCh-11 P-11MCQCh-11 P-12MCQCh-11 P-13MCQCh-11 P-14CECh-11 P-15CECh-11 P-16CECh-11 P-17CECh-11 P-18CECh-11 P-19CECh-11 P-20CECh-11 P-21CECh-11 P-22CECh-11 P-23CECh-11 P-24CECh-11 P-25CECh-11 P-26BECh-11 P-27BECh-11 P-28BECh-11 P-29BECh-11 P-30BECh-11 P-31BECh-11 P-32BECh-11 P-33BECh-11 P-34ECh-11 P-35ECh-11 P-36ECh-11 P-37ECh-11 P-38ECh-11 P-39ECh-11 P-40ECh-11 P-41ECh-11 P-42ECh-11 P-43ECh-11 P-44ECh-11 P-45ECh-11 P-46ECh-11 P-47ECh-11 P-48ECh-11 P-49ECh-11 P-50ECh-11 P-51ECh-11 P-52PSACh-11 P-53PSACh-11 P-54PSACh-11 P-55PSACh-11 P-56PSACh-11 P-57PSACh-11 P-58PSACh-11 P-59PSACh-11 P-52PSBCh-11 P-53PSBCh-11 P-54PSBCh-11 P-55PSBCh-11 P-56PSBCh-11 P-57PSBCh-11 P-58PSBCh-11 P-59PSBCh-11 P-60.1CCh-11 P-60.2CCh-11 P-60.3CCh-11 P-61.1CCh-11 P-61.2CCh-11 P-61.3CCh-11 P-61.4CCh-11 P-62.1CCh-11 P-62.2CCh-11 P-62.3CCh-11 P-63.1CCh-11 P-63.2CCh-11 P-63.3CCh-11 P-63.4CCh-11 P-64.1CCh-11 P-64.2CCh-11 P-65.1CCh-11 P-65.2CCh-11 P-65.3CCh-11 P-65.4CCh-11 P-65.5CCh-11 P-65.6CCh-11 P-65.7CCh-11 P-65.8CCh-11 P-66.1CCh-11 P-66.2CCh-11 P-66.3CCh-11 P-66.4CCh-11 P-66.5CCh-11 P-67.1CCh-11 P-67.2C

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