a)
To determine: Whether the statement voluntary statement is an extension, a composition, or combination of both.
Introduction:
Voluntary settlement refers ton settlement by the debtor to creditor under the situation of firm’s insolvency or bankrupt.
b)
To determine: Whether the statement voluntary statement is an extension, a composition, or combination of both.
Introduction:
Voluntary settlement refers ton settlement by the debtor to creditor under the situation of firm’s insolvency or bankrupt.
b)
To determine: Whether the statement voluntary statement is an extension, a composition, or combination of both.
Introduction:
Voluntary settlement refers ton settlement by the debtor to creditor under the situation of firm’s insolvency or bankrupt.
c)
To determine: Whether the statement voluntary statement is an extension, a composition, or combination of both.
Introduction:
Voluntary settlement refers ton settlement by the debtor to creditor under the situation of firm’s insolvency or bankrupt.
d)
To determine: Whether the statement voluntary statement is an extension, a composition, or combination of both.
Introduction:
Voluntary settlement refers ton settlement by the debtor to creditor under the situation of firm’s insolvency or bankrupt.
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Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
- On January 1, 2018, Primair Corporation loaned Vista Company $300,000 and agreed to guarantee all of Vista’s long-term debt in exchange for (1) decision-making authority over all of Vista’s activities and (2) an annual cash payment of 25 percent of Vista’s revenues. As a result of the agreement, Primair is the primary beneficiary of Vista (a variable interest entity). Primair’s loan to Vista stipulated a 7 percent (market) rate of interest to be paid annually.On January 1, 2018, Primair estimated that the fair value of Vista’s equity shares equaled $150,000 while Vista’s book value was $55,000. Any excess fair over book value at that date was attributed to Vista’s trademark with an indefinite life. Because Primair owns no equity in Vista, all of the acquisition-date excess fair over book value is allocated to the non-controlling interest.Vista paid Primair 25 percent of its 2018 revenues at the end of the year. On December 31, 2018, Primair and Vista submitted the following statements…arrow_forward21. On January 1, 20x1, ABC Bank extended a 10%, P1,000,000 loan to XYZ. Principal is due on January 1, 20x4 but interests are due annually every January 1. ABC Bank accrued direct loan origination costs of P12,000 and indirect loan origination costs of P8,000. In addition, ABC Bank charged XYZ a 6-point non-refundable loan origination fee. The effective interest after considering capitalizable cost is 12%. On December 31, 20x3, the carrying value of the loan receivable is approximately The correct answer is: 982,189arrow_forward21. On January 1, 20x1, ABC Bank extended a 10%, P1,000,000 loan to XYZ. Principal is due on January 1, 20x4 but interests are due annually every January 1. ABC Bank accrued direct loan origination costs of P12,000 and indirect loan origination costs of P8,000. In addition, ABC Bank charged XYZ a 6-point non-refundable loan origination fee. The effective interest after considering capitalizable cost is 12%. On December 31, 20x3, the carrying value of the loan receivable is approximately The correct answer is: 982,189 REQUIRED: Provide a step-by-step solution. NOTE: The answer should be the same with the given, I have already asked and they answered 982,144. I need the process that has the answer, P982,189.arrow_forward
- 21. On January 1, 20x1, ABC Bank extended a 10%, P1,000,000 loan to XYZ. Principal is due on January 1, 20x4 but interests are due annually every January 1. ABC Bank accrued direct loan origination costs of P12,000 and indirect loan origination costs of P8,000. In addition, ABC Bank charged XYZ a 6-point non-refundable loan origination fee. The effective interest after considering capitalizable cost is 12%. On December 31, 20x3, the carrying value of the loan receivable is approximately The correct answer is: 982,189 REQUIRED: Provide a step-by-step solution.arrow_forwardJacobi Supply Company recently ran into certain financial difficulties that have resulted in the initiation of voluntary settlement procedures. The firm currently has $150,000 in outstanding debts and approximately $75,000 in liquidatable short-term assets. Indicate, for each of the following plans, whether the plan is an extension, a composition, or a combination of the two. Also indicate the cash payments and timing of the payments required of the firm under each plan. a. Each creditor will be paid 48 cents on the dollar immediately, and the debts will be considered fully satisfied. b. Each creditor will be paid 80 cents on the dollar in two quarterly installments of 50 cents and 30 cents. The first installment is to be paid in 90 days. c. Each creditor will be paid the full amount of its claims in three installments of 40 cents, 30 cents, and 30 cents on the dollar. The installments will be made in 60-day intervals, beginning in 60 days. d. A group of creditors…arrow_forwardDiscount Amortization On the first day of the fiscal year, a company issues a $3,000,000, 11%, five-year bond that pays semiannual interest of $165,000 ($3,000,000 × 11% × ½), receiving cash of $2,889,599. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.arrow_forward
- On the last day of its fiscal year ending December 31, 2020, the Lynbrook Inc. completed four financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. a. Lynbrook issued 7% stated rate bonds with a face amount of $500,000. The bonds mature on December 31, 2030 (10 years). The market rate of interest for similar bond issues was 10%. Interest is paid quarterly beginning on March 31, 2021. b. The company leased three manufacturing facilities. Lease 1 requires 15 annual lease payments of $100,000 beginning on December 31, 2020. Lease 2 requires 10 semi-annual lease payments of $25,000 beginning on June 30, 2021. Lease 3 requires the first of 6 payments of $35,000 to be deferred for 4 years. Accounting standards require the three leases to be recorded as liabilities for the present value of the scheduled payments. Assume that an annual 8% interest rate properly reflects the time value of money for the lease obligations. Required:…arrow_forwardDiscount Amortization On the first day of the fiscal year, a company issues a $6,700,000, 12%, 4-year bond that pays semiannual interest of $402,000 ($6,700,000 × 12% × ½), receiving cash of $6,111,341. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Casharrow_forwardOn October 1,2021 Steve Company borrowed $500,000 from its parent, Pam Company, at an annual interest rate of 5%, with interest payable semiannually on March 31 and September 30. The note’s principle is due in 5 years. Required; a. What balances appear in the December 31, 2021 trial balances of Pam Company and Steve Company with respect to this intercompany loan? b. What balances should appear on the consolidated financial statements of Pam Company and Steve Company with respect to this intercompany loan? c. Prepare the December 31, 2021 elimination entries needed for this intercompany loan.arrow_forward
- Suppose a party wanted to enter into an FRA that expires in 42 days and is based on 137-day LIBOR. The dealer quotes a 4.75 percent rate on this FRA. Assume that at expiration the 137-day LIBOR is 4 percent and the notional principal is $ 20,000,000. Calculate the FRA payout for a long position.arrow_forwardDue to extreme financial difficulties, an entity negotiated a restructuring of 10%, P5,000,000 note payable due on December 31, 2X18. The unpaid interest on the note on such date is P500,000. The creditor agreed to reduce the face amount to P4,000,000, forgive the unpaid interest, reduce the interest rate to 8%, and extend the due date three (3) years from December 31, 2X18. The present value of 1 at 10% for three (3) periods is 0.75 and the present value of an ordinary annuity of 1 at 10% for three (3) periods is 2.49. Using the given information, answers the following items: What is the discount or premium on the new note payable on December 31, 2X18? What amount should be reported as interest expense for 2X19? What is the carrying amount of note payable on December 31, 2X19?arrow_forwardDue to extreme financial difficulties, an entity negotiated a restructuring of 10%, P5,000,000 note payable due on December 31, 2X18. The unpaid interest on the note on such date is P500,000. The creditor agreed to reduce the face amount to P4,000,000, forgive the unpaid interest, reduce the interest rate to 8%, and extend the due date three (3) years from December 31, 2X18. The present value of 1 at 10% for three (3) periods is 0.75 and the present value of an ordinary annuity of 1 at 10% for three (3) periods is 2.49. Using the given information, answers the following items: Under IFRS 9 Financial Instruments, what is the gain on extinguishment for 2X18? What is the discount or premium on the new note payable on December 31, 2X18? What amount should be reported as interest expense for 2X19? What is the carrying amount of note payable on December 31, 2X19?arrow_forward
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