Balance sheet? General accounting Frasquita acquired equipment from the manufacturer on6/30/2013 and gave a noninterest-bearing note in exchange.Frasquita is obligated to pay $566,000 on 4/30/2014 to satisfythe obligation in full.If Frasquita accrued interest of $15,000 on the note in its 2013year-end financial statements, what amount would it record theequipment on its 6/30/2013 balance sheet?a. $541,000b. $531,000c. $566,000d. $516,000

Step 1: Definition of Non-Interest Bearing NoteA non-interest bearing note is a financial instrument…

Answered: Frasquita acquired equipment from the…

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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At December 31, 2017, Burr Corporation owes $500,000 on a note payable due February 15, 2018. (a) If Burr refinances the obligation by issuing a long-term note on February 14 and using the proceeds to pay off the note due February 15, how much of the $500,000 should be reported as a current liability at December 31, 2017? (b) If Burr pays off the note on February15, 2018, and then borrows $1,000,000 on a long-term basis on March 1, how much of the $500,000 should be reported as a current liability at December 31, 2017, the end of the fiscal year?
On January 1, 2022, Cornet Inc. loaned $187,825 to Pact Co. A zero-interest-bearing note (face amount, $250,000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2024. The prevailing rate of interest for a loan of this type is 9%. What amount of interest income should Cornet recognize in 2022? $18,783 $16,904 $25,000 $22,500
On January 1, 2025, Waterway Co. sold equipment in exchange for an $820000 zero-interest-bearing note due on January 1, 2018. The prevailing rare of interest for anote of this type at January 1, 2025 was 10%. The present value of $1 at 10% for three periods of 0.75131. What amount of interst revenue should be reported in Waterway's 2026 income statement?
Truth Corp. is in the process of preparing its financial statements for the year ended December 31, 2020. The following represent various information about the entity’s intangible assets. On May 1, 2020, Truth sold a patent in exchange for a P5,000,000 non-interest bearing note due on May 1, 2023. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at May 1, 2020 was 14%. The collection of the note receivable is reasonably assured. The patent was purchased for P3,150,000 on September 1, 2016. On that date, the remaining legal life was fifteen years, which was also determined to be the useful life. In 2020, Truth developed a new machine and secured a patent for it. The following expenses were incurred in developing and patenting the machine: Research and development laboratory expenses P1,500,000 Metal used in the construction of the machine 480,000…
On January 2, 2023, Sunland Inc. sells goods to Bramble Company in exchange for a zero-interest-bearing note with a face value of $7,480, with payment due in 12 months. The fair value of the goods at the date of sale is $6,800 (cost $4,080). Assume that the company chooses to reflect the interest component. (a) Your answer is correct. Prepare the journal entries to record this transaction on January 2, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation January 2, 2023 Notes Receivable Sales Revenue (To record sales) January 2, 2023 Cost of Goods Sold (b) (c) Inventory (To record cost of goods sold) eTextbook and Media List of Accounts Your answer is correct. How much total revenue should be recognized in 2023? Revenue recognized in 2023 $ eTextbook and…
On January 1, 2017, Oldham Company sold goods to Windall Company in exchange for a 3-year, non-interest-bearing note with a face value of $30,000. If Oldham entered into a separate financing transaction with Windall, an appropriate interest rate would be 10%; therefore, the transaction price would be $22,540. Which of the following statements is true about the journal entry that records the transaction when Oldham delivers the goods to Windall on January 1, 2017? Debit Discount on Note Receivable $7,460 Credit Sales Revenue $22,540 Credit Interest Revenue $7,460 Debit Note Receivable for $22,540
On October 1, 2020, Balaton Corporation issued a P500,000, 12 month, 12% note to ABC Company in payment of account. On the same date, the company borrowed P1,000,000 from the Asian Bank by signing a 12-month, noninterest-bearing, P1,120,000 note. Balaton uses the straight line method of amortization. What is the total liability to be reported on the December 31, 2020 statement of financial position arising from the note transactions? The gain (loss) on extinguishment of debt is:
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Lathrop Inc. purchased equipment on January 1, 2020, for $30,000 cash plus a note payable. The fair value of the equipment on January 1, 2020, is $108,533. The market rate of interest is 6%. 5M Corp. uses the effective interest method to amortize discounts and premiums. Record the entries over the term of the note payable for the following three separate scenarios for the structuring of the note payable. a. The principal of $80,000 is due on December 31, 2021, and the note specified 5% interest payable each December 31 over a two-year period. b. The face value of the note payable is instead $88,240 and is due on December 31, 2021. The note is structured as a zero-interest-bearing note payable over a two-year period. c. The loan is extended to three years with equal payments of $29,380 due on each December 31 over the term of the note. The note will be fully paid upon maturity. Case One Case Two Case Three Note: Round your answers to the nearest whole dollar. • Note: Include any net…
On December 31, 2010 a company was indebted to Creditor Co. on a P2,000,000 10% note. Only interest had been paid to date. Due to its financial difficulties, the company has negotiated a restructuring of its note payable. The parties agreed that the company would settle the debt on the following terms: settle 1/2 of the note by transferring land with a recorded value of P800,000 and a fair value of P900,000 • settle 1/4 of the note by transferring 200,000 shares of P1 par ordinary shares with a fair market value of P15 per share modify the terms of the remaining 1/4 of the note by reducing the interest rate to 5%, extend the due date 3 years from the date of restructuring and reducing the principal to P300,000. How much was the (1) total gain on extinguishment of debt and (2) carrying amount of the note payable as of December 31, 2021? O P437,306 and P273,963 O P550,006 and P142,494 O P336.306 and P262,694 O P437,306 and P262.694
Noel Bank loaned 9,000,000 to a borrower on January 1, 2017. The terms of the loan were payment in full on January 1, 2022, plus annual interest payment at 12%. The debtor paid interest on January 1, 2018 as scheduled. However, due to financial setbacks, the debtor was unable to pay interest on 2019. BPI accrued interest on Dec. 31, 2018 but did not continue to accrue interest for 2019 due to considered impairment of the loan. On December 31, 2019, BPI projected these cash flows: December 31, 2020 - P 1,500,000 December 31, 2021 - 2,000,000 December 31, 2022 - 3,000,000 December 31, 2023 - 2,500,000 The present value of 1 at 12% is as follows: For 1 period - 0.8929 For 2 periods - 0.7972 For 3 periods - 0.7118 For 4 periods - 0.6355 How much should be recognized as interest income for 2020?
On January 1, 2019, VWX Corporation sold equipment costing P380,000 with accumulated depreciation of P160,000 on the date of sale. Adobo received as consideration for the sale, a P400,000, non-interest bearing note, due January 1, 2022. There was no established exchange price for the equipment and the note had no read market. The prevailing rate of interest for a note of this type at January 1, 2019 was 10%. The present value of 1 at 10% for three periods is 0.75. What is the note’s carrying amount at December 31, 2019? 135,000 340,000 330,000 300,000

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