Ivanhoe Company owes $179,000 plus $15,800 of accrued interest to Shamrock State Bank. The debt is a 10-year, 10% note. During 2020, Ivanhoe’s business deteriorated due to a faltering regional economy. On December 31, 2020, Shamrock State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $336,000, accumulated depreciation of $184,800, and a fair value of $158,000. Prepare journal entries for Ivanhoe Company and Shamrock State Bank to record this debt settlement. Assume that, instead of transferring the machine, Ivanhoe decides to grant 12,000 shares of its common stock ($10 par) which has a fair value of $158,000 in full settlement of the loan obligation. If Shamrock State Bank treats Ivanhoe’s stock as a trading investment, prepare the entries to record the transaction for both parties

Ivanhoe Company owes $179,000 plus $15,800 of accrued interest to Shamrock State Bank. The debt is a 10-year, 10% note. During 2020, Ivanhoe’s business deteriorated due to a faltering regional economy. On December 31, 2020, Shamrock State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $336,000, accumulated depreciation of $184,800, and a fair value of $158,000. Prepare journal entries for Ivanhoe Company and Shamrock State Bank to record this debt settlement. Assume that, instead of transferring the machine, Ivanhoe decides to grant 12,000 shares of its common stock ($10 par) which has a fair value of $158,000 in full settlement of the loan obligation. If Shamrock State Bank treats Ivanhoe’s stock as a trading investment, prepare the entries to record the transaction for both parties

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter11: Property Dispositions

Section: Chapter Questions

Problem 84TA

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