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On January 1, 2020, Wilson Co. signed a three year note with Chase Bank. The note was for $10 million, and required Wilson Co. to make annual interest payments of 5%. Due to fallout from COVID-19, Wilson became financially distressed. On November 1, 2020 Chase agreed to modify the terms of the loan. Wilson would no longer be required to pay any interest (including any interest accrued to date), and instead would pay back $10.5 million on the maturity date

On January 1, 2020, Wilson Co. signed a three year note with Chase Bank. The note was for $10 million, and required Wilson Co. to make annual interest payments of 5%. Due to fallout from COVID-19, Wilson became financially distressed. On November 1, 2020 Chase agreed to modify the terms of the loan. Wilson would no longer be required to pay any interest (including any interest accrued to date), and instead would pay back $10.5 million on the maturity date

FINANCIAL ACCOUNTING
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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On January 1, 2020, Wilson Co. signed a three year note with Chase Bank. The note was for $10 million, and required Wilson Co. to make annual interest payments of 5%. Due to fallout from COVID-19, Wilson became financially distressed. On November 1, 2020 Chase agreed to modify the terms of the loan. Wilson would no longer be required to pay any interest (including any interest accrued to date), and instead would pay back $10.5 million on the maturity date. Which section of the FASB Accounting Standards Codification best defines how Wilson should account for the modified loan?
Transcribed Image Text:On January 1, 2020, Wilson Co. signed a three year note with Chase Bank. The note was for $10 million, and required Wilson Co. to make annual interest payments of 5%. Due to fallout from COVID-19, Wilson became financially distressed. On November 1, 2020 Chase agreed to modify the terms of the loan. Wilson would no longer be required to pay any interest (including any interest accrued to date), and instead would pay back $10.5 million on the maturity date. Which section of the FASB Accounting Standards Codification best defines how Wilson should account for the modified loan?
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