On January 1, 2002, Cougar Company received a two-year $500,000 loan. The loan calls for payments to made at the end of each year based on the prevailing market rate at January 1 of each year. The interest rate at January 1, 2002, was 10 percent. Aggie company also has a two-year $500,000 loan, but Aggie's loan carries a fixed interest rate of 10 percent. Cougar Company does not want to bear the risk that interest rates may increase in year two of the loan. Aggie Company believes that rates may decrease and they would prefer to have variable debt. So the two companies enter into an interest rate swap agreement whereby Aggie agrees to make Cougar's interest payment in 2003 and Cougar likewise agrees to make Aggie's interest payment in 2003. The two companies agree to make settlement payments, for the difference only, on December 31, 2003. If the interest rate on January 1, 2003 is 8 percent, what will be Cougar's settlement payment to/from Aggie?On January 1, 20x1, ABC Co. acquired 60% interest in XYZ, Inc. for ₱2,000,000 cash. ABC Co. incurred transaction costs of ₱100,000 in the business combination. ABC Co. elected to measure NCI at fair value. An independent valuer assessed the NCI’s fair value at ₱1,080,000. The fair values of XYZ’s identifiable assets and liabilities at the acquisition date were ₱6,000,000 and ₱3,500,000, respectively. How much is the goodwill (gain on a bargain purchase)?

SOLUTION WORKING NOTES- 1- COMPUTATION OF INTEREST - 2002 INTEREST = 500000*1YEAR * 10% = 50000.…

Answered: On January 1, 2002, Cougar Company…

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 16P

Related questions

Question

On January 1, 2002, Cougar Company received a two-year $500,000 loan. The loan calls for payments to made at the end of each year based on the prevailing market rate at January 1 of each year. The interest rate at January 1, 2002, was 10 percent. Aggie company also has a two-year $500,000 loan, but Aggie's loan carries a fixed interest rate of 10 percent. Cougar Company does not want to bear the risk that interest rates may increase in year two of the loan. Aggie Company believes that rates may decrease and they would prefer to have variable debt. So the two companies enter into an interest rate swap agreement whereby Aggie agrees to make Cougar's interest payment in 2003 and Cougar likewise agrees to make Aggie's interest payment in 2003. The two companies agree to make settlement payments, for the difference only, on December 31, 2003. If the interest rate on January 1, 2003 is 8 percent, what will be Cougar's settlement payment to/from Aggie?
On January 1, 20x1, ABC Co. acquired 60% interest in XYZ, Inc. for ₱2,000,000 cash. ABC Co. incurred transaction costs of ₱100,000 in the business combination. ABC Co. elected to measure NCI at fair value. An independent valuer assessed the NCI’s fair value at ₱1,080,000. The fair values of XYZ’s identifiable assets and liabilities at the acquisition date were ₱6,000,000 and ₱3,500,000, respectively. How much is the goodwill (gain on a bargain purchase)?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps