meet the scheduled December 31, 2017 payment of principal and interest because of financial difficulties. On September 30, 2017, Freez
Q: SAOD Company sold merchandise for $300,000 to RELANSE Company on January 1, 2021 and received a…
A: As per the term of restructuring on Dec 31, 2021, the Relanse Company will pay 210000 at the end of…
Q: Noel Bank loaned 9,000,000 to a borrower on January 1, 2017. The terms of the loan were payment in…
A: Impairment loss=Total carrying value-Present value of loan
Q: At January 1, 2016, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due…
A:
Q: What is the present value of the new liability? What is the gain on modification of debt for 2021?…
A:
Q: On December 31, 2017, Pharoah Co. sold equipment to Shamrock, Inc. Pharoah Co. agreed to accept a…
A: But in this case cash price is not given. Future value of consideration is given ,consideration…
Q: ABC Company after having experienced financial difficulties in 2020 negotiated with a major creditor…
A: ANSWER Book value of equipment = Original cost - Accumulated depreciation Gain/Loss on sale of…
Q: On January 1, 2017, Persephone Company sold a piece of transportation equipment with a historical…
A: Cost of equipment : P1,000,000 Accumulated depreciation : P300,000 Note receivable : P800,000 , 12%
Q: othschild Chair Company, was indebted to First Lincoln Bank under a $20 million, 10% unsecured note.…
A: Step 1 Journal is the part of book keeping.
Q: d the proceeds of $1,440,000 from the stock issuance, along with $624,000 in cash to retire the…
A: The balance sheet refers to the financial document of a company that reflects its performance for a…
Q: Noel Bank loaned 9,000,000 to a borrower on January 1, 2017. The terms of the loan were payment in…
A: Answer and calculations are given below
Q: At January 1, 2021, NCI Industries, Inc. was indebted to First Federal Bank under a $240,000, 10%…
A: 1 ) Calculation of Present value of debt = ( 240000 + ( 240000 x 10 % ) )…
Q: What amount should be reported as gain from extinguishment of debt in the 2020 income statement?
A: This question belongs to the loan and notes payable. Due to the financial crisis faced by the…
Q: At January 1, 2021, Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $20…
A: S.No. Account titles and explanations Debit Credit 1) Land $ 3.00 Gain on disposal…
Q: At January 1, 2024, NCI Industries, Incorporated was indebted to First Federal Bank under a…
A: A journal entry is a financial transaction recorded in a company's accounting system. It is the…
Q: 1. The $1,779,000 note receivable is dated May 1, 2016, bears interest at 8%, and represents the…
A: The principal portion and interest on notes need to be accounted seperately. Interest on notes…
Q: On January 1, 2017, Cheyenne Company issued a $1,224,300, 5-year, zero-interest-bearing note to…
A: A note is a financial instrument which is issued to pay a certain sum of money at a specified date.…
Q: On December 31, 2018, ABC Corp. acquired Garlic Corp.’s P1,000,000 notes for P927,880. The market…
A: The impairment is recognized when the value of assets is lower than its book value.
Q: At January 1, 2018, Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $20…
A:
Q: equired: repare all journal entries by First Lincoln Bank to record the restructuring and any…
A: S.No.Account titles and explanationsDebitCredit1)Land $ 3.00 Gain on disposal of assets $…
Q: On July 1, 2017, KYU Co. discounted a 90-day, P850,000, 12% note, received from a customer on June…
A: Bills of exchange: Bills of exchange or notes are prepared for the smooth functioning of trade.…
Q: On December 31, 2017, Pharoah Co. sold equipment to Shamrock, Inc. Pharoah Co. agreed to accept a…
A: Zero-interest-bearing note is the note in which the interest is not paid to the bond holders. The…
Q: Check my wa At January 1, 2021, Rothschild Chair Company, Inc., was Indebted to First Lincoln Bank…
A: Answer: Date Account title Debit($) Credit($) January 1,2021 No entry is required.…
Q: On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day .…
A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: At January 1, 2021, Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $39…
A: Journal entry records the accounting transactions of a business in a journal book. All the business…
Q: Rothschild Chair Company, Incorporated, was indebted to First Lincoln Bank under a $20 million, 10%…
A: Journal entry records the accounting transactions of a business in a journal book. All the business…
Q: BDO loaned P5,000,000 to NOBLE Company on January 1, 2016. The terms of the loan require the…
A: Impairment loss refers to the loss incurred to the company due to a significant decline in the value…
Q: Blue Cells Can contain On December 31, 2017, Short Co. is in financial difficulty and cannot pay…
A: The objective of the question is to prepare the journal entry for the payment of the cash interest…
Q: At January 1, 2018, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due…
A: 1.
Q: During 2021, tesa Company experienced financial difficulties and is likely to default on a…
A: This question belongs to the loan and notes payable. Due to the financial crisis faced by the…
Q: On January 1, 2011, SVTA Bank extended a P1,200,000 loan to ABC, Inc. Principal is due on December…
A: Jan -2011 loan sanctioned for 1200000 Rate of Interest 11% Re payment terms, Interest to be paid…
Q: At January 1, 2018, NCI Industries, Inc., was indebted to First Federal Bank under a $240,000, 10%…
A: 1 ) Calculation of Present value of debt = ( $240,000 + ( $240,000 x 10 % ) )…
At December 31, 2016, Frost Company had outstanding P3,000,000, 12% note payable to Freeze Bank dated January 1, 2012. The note was due on December 31, 2017 which interest every December 31. During 2017, Frost notified Freeze Bank that it might be unable to meet the scheduled December 31, 2017 payment of principal and interest because of financial difficulties. On September 30, 2017, Freeze Bank sold the note for P2,800,000 to Frozen Company, one of Frost Company's oldest and largest customers, On December 31, 2017, Frozen Company agreed to accept inventory costing P2,600,000 worth P3,150,000 from Frost Company in full settlement of the note.
The gain/loss reported in Frost Company's profit or loss as a result of the liability derecognition is
Step by step
Solved in 2 steps
- At January 1, 2018, NCI Industries, Inc., was indebted to First Federal Bank under a $240,000, 10% unsecurednote. The note was signed January 1, 2014, and was due December 31, 2019. Annual interest was last paid onDecember 31, 2016. NCI was experiencing severe financial difficulties and negotiated a restructuring of the termsof the debt agreement. First Federal agreed to reduce last year’s interest and the remaining two years’ interestpayments to $11,555 each and delay all payments until December 31, 2019, the maturity date.Required:Prepare the journal entries by NCI Industries, Inc., necessitated by the restructuring of the debt at: (1) January 1,2018; (2) December 31, 2018; and (3) December 31, 2019.On January 1, 2017, Cheyenne Company issued a $1,224,300, 5-year, zero-interest-bearing note to Ayayai Bank. The note was issued to yield 8% annual interest. Unfortunately, during 2018 Cheyenne fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2018, Ayayai Bank decided that the loan was impaired. Cheyenne will probably pay back only $816,200 of the principal at maturity.At January 1, 2024, NCI Industries, Incorporated was indebted to First Federal Bank under a $246,000, 10% unsecured note. . The note was signed January 1, 2017, and was due December 31, 2025. Annual interest was last paid on December 31, 2022. • NCI was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. • First Federal agreed to reduce last year's interest and the remaining two years' interest payments to $11,844 each and delay all payments until December 31, 2025, the maturity date. Required: Prepare the journal entries by NCI Industries, Incorporated, necessitated by the restructuring of the debt at (1) January 1, 2024; (2) December 31, 2024; and (3) December 31, 2025. Note: Do not round intermediate calculations. Round final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required in the first account field. Use tables, Excel, or a financial calculator. (FV of…
- On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day . It is a $3,300,000 8% issued at par note, payable to Key Bank. Key Bank agrees to accept from Nicholas equipment that has a fair value of 1,450,000, originally costing $2,400,000, with accumulated depreciation of $1,250,000. Key Bank also extends the maturity date to December 31, 2021, reduces the face amount of the note to $1,250,000, and reduces the interest rate to 6%, with interest payable at the end of each year. a. Nicholas should recognize a gain or loss on the transfer of the equipment of: b. At the end of each of the next three years Nicholas records the $ 75,000 interest paid to Key Bank as a: c. In determining the carrying value of the note at December 31, 2018 Key Bank uses an effective interest rate equal to: d. Key Bank records a loss on restructuring of: e. In recording the loss on restructuring, Key bank:On December 31, 2018, ABC Corp. acquired Garlic Corp.’s P1,000,000 notes for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%, payable annually. THe notes mature in five years and classifies as financial asset at amortized cost. At December 31, 2020, the note is considered credit-impaired. Management determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity. At December 31,2021, because of the improvement in the credit rating of Garlic Corp., Sinait Corp. reassessed the collectibility of the note and now expects to collect P900,000 from Garlic Corp, at maturity date. The required loss allowance at December 31,2020 is Interest income to be recognized in 2021 profit or loss The impairment gain to be recognized in 2021 profit or loss isNoel 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. Noel Bank 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, Noel Bank 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 is the impairment loss to be recognized on December 31, 2019?
- On December 31, 2017, Pharoah Co. sold equipment to Shamrock, Inc. Pharoah Co. agreed to accept a $590,000 zero-interest- bearing note due December 31, 2019, as payment in full. Shamrock, Inc. incorporated in 2017 and had very little credit history at th time of the transaction with Pharoah. Therefore, at that time, Shamrock typically borrowed funds at a rate of 12%. Pharoah has a lo and positive credit history. Therefore, Pharoah has various lines of credit at 4%. (a) - Your answer is partially correct. Prepare the journal entry to record the transaction of December 31, 2017, for Pharoah Co. (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 0 fo the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124.) Account Titles and Explanation Debit Credit Notes Receivable Sales RevenueNoel 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?SAOD Company sold merchandise for $300,000 to RELANSE Company on January 1, 2021 and received a one-year note bearing an interest rate of 12% for the full amount. Interest receivable related to the note is $36,000 as of December 31, 2021. Because of the recent financial crisis experienced by RELANSE, on December 31, 2021, an agreement to restructure the note has been reached in which only $210,000 of the principal will be collected at the end of 2023 and condonation of the accrued interest. The Present Value at 12% after two years is. 0.7972. 1. How much is the amount of impairment loss SAOD Company must recognize on its receivable on December 31, 2021? a. $132,588.00 b. $68,140.80 c. $100,447.20 d. $168,588.00 2. How much is the carrying value of the Restructured Notes Receivable (present value of future cash inflows) to be shown in SAOD’s statement of financial position as of December 31, 2021? a. $167,412.00 b. $210,460.80 c. $239,160.00 d.…
- Blue Cells Can contain On December 31, 2017, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 face value note with $200,000 accrued interest payable to Bryan, Inc. The original market rate of interest on the note was 12.58613%. Bryan agrees to forgive the accrued interest, extend the maturity date (two years) to December 31, 2019, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,712,000 (using the original market rate). Do NOT add rows to the spreadsheet! Discount Cash Premium Interest payable Par Interest expense Discount on bond payable Yes Bonds payable No Loss on redemption Gain on redemptin Cash Interest payable Interest receivable Notes payable Gain on restructuring Loss on restructuring Discount on Note payable Premium on Note payable…1. The $1,779,000 note receivable is dated May 1, 2016, bears interest at 8%, and represents the balance of the consideration received from the sale of Ayayai's electronics division to Blossom Company. Principal payments of $593,000 plus appropriate interest are due on May 1, 2017, 2018, and 2019. The first principal and interest payment was made on May 1, 2017. Collection of the note instalments is reasonably assured. 2. The $380,000 note receivable is dated December 31, 2016, bears interest at 7%, and is due on December 31, 2019. The note is due from Marcia Cumby, president of Ayayai Corp., and is secured by 10,000 Ayayai's common shares. Interest is payable annually on December 31, and the interest payment was made on December 31, 2017. The quoted market price of Ayayai's common shares was $40 per share on December 31, 2017. 3. On April 1, 2017, Ayayai's sold a patent to Sunland Company in exchange for a $180,000 non–interest-bearing note due on April 1, 2019. There was no…BDO loaned P5,000,000 to NOBLE Company on January 1, 2016. The terms of the loan require the principal payment of P5,000,000 to be made after 5 years on December 31, 2020 and interest at 12% to be paid annually on December 31. The first interest payment is due on December 31, 2016. NOBLE Company made the required interest payment during 2016. However, during 2017 NOBLE Company began to experience financial difficulties, which led to the default of the 2017 required interest payment. This caused BDO to reassess the collectability of the loan. On December 31, 2018, BDO did not continue to accrue interest and determined that the remaining principal payment will be collected but it is probable that the accrued interest further interest cannot be collected. The probable timing and amount of collections is determined as follows: December 31, 2019 P500,000 December 31, 2020 1,000,000 December 31, 2021 1,500,000 December 31, 2022 2,000,000 The present value at 12% is as follows: For one period…