Directions: Complete the worksheet for accepting a voluntary conveyance based on the given scenario and answer the questions below. Scenario: Farmer John has ceased all farming operations and decided to voluntarily convey all real estate security to FSA. The market value of the property is $160,000. The holding period is 165 days (5.5 months or 0.45 years). The prior lienholder debt is $37,365. The FSA FO loan is secured by a second lien position with total principal and interest of $53,365. Taxes have not been paid for 4 years and total $8,500. Next year's taxes will be $2,300. Through a State notice, you have been advised that the Farm Land Market Advisory Committee ha determined that the land appreciation in your area is 3 percent annually. You also learn that the property management cost for your State is $1,500 and the administrative cost for an FO loan is $1,107. You have determined that closing costs will be $250 and resale expenses will be $950. The current operating loan rate is 5 percent. No other income or expenses are projected. 1. Should the Agency accept the conveyance? 2. List the reasons supporting your decision.

Directions: Complete the worksheet for accepting a voluntary conveyance based on the given scenario and answer the questions below. Scenario: Farmer John has ceased all farming operations and decided to voluntarily convey all real estate security to FSA. The market value of the property is $160,000. The holding period is 165 days (5.5 months or 0.45 years). The prior lienholder debt is $37,365. The FSA FO loan is secured by a second lien position with total principal and interest of $53,365. Taxes have not been paid for 4 years and total $8,500. Next year's taxes will be $2,300. Through a State notice, you have been advised that the Farm Land Market Advisory Committee ha determined that the land appreciation in your area is 3 percent annually. You also learn that the property management cost for your State is $1,500 and the administrative cost for an FO loan is $1,107. You have determined that closing costs will be $250 and resale expenses will be $950. The current operating loan rate is 5 percent. No other income or expenses are projected. 1. Should the Agency accept the conveyance? 2. List the reasons supporting your decision.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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