Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 2, Problem 13PC
a.
To determine
Indicate the effect of market value changes and sale of asset using valuation of note at present value of future cash flow at historical interest rate of 8%.
b.
To determine
Indicate the effect using the fair value changes in the market interest rates and including unrealized gains and losses.
c.
To determine
Explain the reason for similar retained earnings in case ‘a.’ and case ‘b’.
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(e) On December 31, 2015, Malton Company acquired a computer from Hamilton Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2019. Malton Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 residual value.
Prepare the journal entry for the purchase on December 31, 2015 and any necessary adjusting entries relative to depreciation (use straight-line) and amortization on December 31, 2016.
Problem I- On January 1, 2017, Yssa Company sold a piece of land with a carrying amount of P6,000,000 in exchange for a promissory note with face amount of P7,500,000 and stated interest rate of 5%. The note is payable in annual installments of P2,500,000 plus accrued interest on the outstanding balance. The first installment is due on December 31, 2017. There is no established cash price for the land and the note has no ready market. The prevailing interest for a note of this type is 12%. Round off PV factors up to two decimal places and round off figures to nearest peso.
Required:
Prepare an amortization table.
Prepare all journal entries to record the transactions from January 1,2017 to December 31, 2019.
Chapter 2 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 2 - Prob. 1QECh. 2 - Asset Valuation and Income Recognition. Asset...Ch. 2 - Trade-Offs among Acceptable Accounting...Ch. 2 - Income Flows versus Cash Flows. The text states,...Ch. 2 - Prob. 5QECh. 2 - Prob. 6QECh. 2 - Prob. 7QECh. 2 - Prob. 8QECh. 2 - Computation of Income Tax Expense. A firms income...Ch. 2 - Computation of Income Tax Expense. A firms income...
Ch. 2 - Costs to Be Included in Historical Cost Valuation....Ch. 2 - Effect of Valuation Method for Nonmonetary Asset...Ch. 2 - Prob. 13PCCh. 2 - Prob. 14PCCh. 2 - Prob. 15PCCh. 2 - Deferred Tax Assets. Components of the deferred...Ch. 2 - Interpreting Income Tax Disclosures. The financial...Ch. 2 - Interpreting Income Tax Disclosures. Prepaid Legal...Ch. 2 - Interpreting Income Tax Disclosures. The financial...Ch. 2 - Analyzing Transactions. Using the analytical...Ch. 2 - Prob. 21PCCh. 2 - Starbucks The financial statements of Starbucks...Ch. 2 - Prob. 1BICCh. 2 - Prob. 1CICCh. 2 - Prob. 1DICCh. 2 - Prob. 1EICCh. 2 - Prob. 1FICCh. 2 - Starbucks The financial statements of Starbucks...
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