Concord Company commonly issues long-term notes payable to its various lenders. Concord has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Concord has elected to use the fair value option for the long-term notes issued to Barclay's Bank and has the following data related to the carrying and fair value for these notes. Any changes in fair value are due to changes in market rates, not credit risk. Carrying Value Fair Value $50,700 $50,700 December 31, 2020 December 31, 2021 45,400 43,900 December 31, 2022 32,800 34,600 (a) Prepare the journal entry at December 31 (Concord's year-end) for 2020, 2021, and 2022, to record the fair value option for these notes. (lf no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Date Dec. 31, 2020 No Entry No Entry Notes Payable Dec. 31, 2021 1500 Unrealized Holding Gain or Loss - Income 1500 Dec. 31, 2022 Unrealized Holding Gain or Loss - Income 1800 Notes Payable 1800 (b) At what amount will the note be reported on Concord's 2021 balance sheet? $ Note to be reported on Concord's 2021 balance sheet 43900 (c) What is the effect of recording the fair value option on these notes on Concord's 2022 income? of $ The effect of recording the fair value option would result in unrealized holding loss 300
Concord Company commonly issues long-term notes payable to its various lenders. Concord has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Concord has elected to use the fair value option for the long-term notes issued to Barclay's Bank and has the following data related to the carrying and fair value for these notes. Any changes in fair value are due to changes in market rates, not credit risk. Carrying Value Fair Value $50,700 $50,700 December 31, 2020 December 31, 2021 45,400 43,900 December 31, 2022 32,800 34,600 (a) Prepare the journal entry at December 31 (Concord's year-end) for 2020, 2021, and 2022, to record the fair value option for these notes. (lf no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Date Dec. 31, 2020 No Entry No Entry Notes Payable Dec. 31, 2021 1500 Unrealized Holding Gain or Loss - Income 1500 Dec. 31, 2022 Unrealized Holding Gain or Loss - Income 1800 Notes Payable 1800 (b) At what amount will the note be reported on Concord's 2021 balance sheet? $ Note to be reported on Concord's 2021 balance sheet 43900 (c) What is the effect of recording the fair value option on these notes on Concord's 2022 income? of $ The effect of recording the fair value option would result in unrealized holding loss 300
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How do I calculate the amount for the entry for Dec 31, 2022 and the end of the year. Screenshot of problem attached.
Transcribed Image Text:Concord Company commonly issues long-term notes payable to its various lenders. Concord has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Concord has
elected to use the fair value option for the long-term notes issued to Barclay's Bank and has the following data related to the carrying and fair value for these notes. Any changes in fair value are due to changes in market rates,
not credit risk.
Carrying Value
Fair Value
$50,700
$50,700
December 31, 2020
December 31, 2021
45,400
43,900
December 31, 2022
32,800
34,600
(a) Prepare the journal entry at December 31 (Concord's year-end) for 2020, 2021, and 2022, to record the fair value option for these notes. (lf no entry is required, select "No Entry" for the account titles and enter 0 for the
amounts.Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Date
Dec. 31, 2020
No Entry
No Entry
Notes Payable
Dec. 31, 2021
1500
Unrealized Holding Gain or Loss - Income
1500
Dec. 31, 2022
Unrealized Holding Gain or Loss - Income
1800
Notes Payable
1800
(b) At what amount will the note be reported on Concord's 2021 balance sheet?
$
Note to be reported on Concord's 2021 balance sheet
43900
(c) What is the effect of recording the fair value option on these notes on Concord's 2022 income?
of $
The effect of recording the fair value option would result in unrealized holding
loss
300
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