Morley Manufacturing has notes receivable that have a fair value of P810,000 and a carrying amount of P620,000. Morley decides on December 31, 2021, to use the fair value option for these recently-acquired receivables. Which of the following statements is correct regarding the election of the fair value option by Morley?
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- Bonita Corp. sells idle machinery to Enyart Company on July 1, 2020, for $38,000. Bonita agrees to repurchase this equipment from Enyart on June 30, 2021, for a price of $39,900 (an imputed interest rate of 5%). (a) Prepare the journal entry for Bonita for the transfer of the asset to Enyart on July 1, 2020. (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.) Account Titles and Explanation Debit CreditOn July 1, 2018, ABC Company borrowed P1,000,000 on a 10% five-year note payable. OnDecember 31, 2018, the fair value of the note is determined to be P975,000 based on marketand interest factors. The entity has elected the fair value option for reporting the financialliability.Compute the following and show your solution:c. gain or loss to be recognized in 2018 as a result of the fair value optiond. discount on note payable presented on December 31, 2018Bonita Corp. sells idle machinery to Enyart Company on July 1, 2020, for $38,000. Bonita agrees to repurchase this equipment from Enyart on June 30, 2021, for a price of $39,900 (an imputed interest rate of 5%). (a) Your answer has been saved. See score details after the due date. Prepare the journal entry for Bonita for the transfer of the asset to Enyart on July 1, 2020. (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.) Account Titles and Explanation Debit Credit Cash 38000 Liability to Enyart Company 38000 eTextbook and Media List of Accounts
- Sandhill Corp. sells idle machinery to Hollis Company on July 1, 2020, for $33,000. Sandhill agrees to repurchase this equipment from Hollis on June 30, 2021, for a price of $34,320 (an imputed interest rate of 4%). Prepare any other necessary journal entries for Sandhill in 2020. (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 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 Interest Expense enter a debit amount enter a credit amount Liability to Hollis Company enter a debit amount enter a credit amountCramer Corp. sells idle machinery to Enyart Company on July 1, 2020, for $40,000. Cramer agrees to repurchase this equipment from Enyart on June 30, 2021, for a price of $42,400 (an imputed interest rate of 6%). Instructions a. Prepare the journal entry for Cramer for the transfer of the asset to Enyart on July 1, 2020. b. Prepare any other necessary journal entries for Cramer in 2020. c. Prepare the journal entry for Cramer when the machinery is repurchased on June 30, 2021.Michael Inc., a publicly accountable entity, sells specialized equipment on December 31, 2020. The equipment could have been purchased for a cash price of $3,250,000 however, the purchaser opted to sign a note payable with the following terms: - interest payments of $75,000 on December 31, 2021, 2022, 2023 and 2024 and - a final payment of $3,500,000 on December 31, 2024. Required: i) ii) Prepare all journal entries relative to this note for Michael Inc. (the seller) for the years ending December 31, 2020 and 2021. If instead, Michael Inc. is a private company subject to ASPE, prepare the December 31, 2021 journal entry using the more simple method allowed under ASPE.
- On September 1, 2020, SMD Company borrowed P5,000,000, 10%interest-bearing note due in five years. On December 31, 2020, the fairvalue of the note is determined to be P4,350,000. The entity electedirrevocably the fair value option in measuring the note payable. Whatamount of gain/loss from change in fair value of the note payable shouldbe reported for 2020? A. P1,250,000 gainB. P1,250,000 lossC. P650,000 gainD. P650,000 lossOn July 1, 2021, S Furniture, sold to B tables and chairs for a price of P500,000 for the latter's café and restaurant. B will pay 50% upon delivery and the balance will be paid on June 30, 2022. The goods were delivered to B and the 50% down payment was made by B, but the parties stipulated that the ownership over the books does not pass to B, until full payment of the price. The day before June 30, 2022, the restaurant of B was gutted by fire together with the tables and chairs purchased from S. On June 30, 2022, S demanded payment from B. B contends that he is no longer liable for the balance, because ownership was retained by S, thus, following the res perit domino rule, S should bear the risk of loss. Is B correct. Give reason/s.Presented below are two independent situations. a. On January 1, 2020, Wright Inc. purchased land that had an assessed value of $350,000 at the time of purchase. A $550,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1, 2020, and the interest expense to be reported in 2020 related to this transaction. b. On January 1, 2020, Field Furniture borrowed $5,000,000 (face value) from Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Field Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate of interest is normally charged on this type of loan. Prepare the journal entry to record this transaction and determine the amount of interest expense…
- Jack, chief finance officer for sitcom products, convinced the president of the company to enter in to a 90days, forward contract to sell 500,000 kronas as a speculative venture. When the forward contract was acquired on November 1, 2019, the spot rate for the krona was OMR .8041 and the 90days future rate was OMR .8321. At December 31 2019, the end of the firm’s fiscal year, the spot rate was $.9483 and the future rate for kronas to be sold on January 30, 2020, was $.9948. On January 30, 2020, the spot rate was $.9830.Required: Prepare all necessary journal entries in regard to the forward contract.On January 1, 2023, Green Company finished consultation services and accepted in exchange a promissory note with a face value of $600,000, a due date of January 1, 2026, and a stated rate of 4%, with interest receivable at the beginning of each year (the first interest will be received on January 1, 2024). The fair value of the services is not easily determined and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%. The company has a fiscal year-end of December 31. Required: a) Calculate the present value of the note, using a financial calculator. b) Prepare a Schedule of Note Discount Amortization for Green Company under the effective interest method. (Round to whole dollars) c) Prepare the journal entries for 2023. Plz answer fast i give up voteOn December 31, 2019, Magtuba Company finished consultation services and accepted in exchange a promissory note with a face value of P300,000, a due date of December 31, 2022, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%. 13. The service revenue to be recognized for the year ended December 31, 2019 is 14. The carrying amount of the note receivable as of December 31, 2020 is