On December 31, 2020, Rose National Bank enters into a debt restructuring agreement with Emerald Resorts, which is experiencing financial difficulties. The bank restructures a $14,000,000 loan receivable issued at par (interest paid to date) by: 1. Reducing the principal obligation from $14,000,000 to $12,000,000; 2. Extending the maturity date from December 31, 2020 to December 31, 2025; and 3. Reducing the interest rate from 8% to 6%. Interest income from the note receivable from Emerald Resorts in 2022 was
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- On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000On December 31, 2020, American Bank enters into a debt restructuring agreement with Shamrock Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,760,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,760,000 to $3,008,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Shamrock pays interest at the end of each year. On January 1, 2024, Shamrock Company pays $3,008,000 in cash to American Bank. Assuming that the interest rate Shamrock should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Shamrock Company after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.) SHAMROCK COMPANYInterest Payment Schedule After Debt RestructuringEffective-Interest Rate Date CashPaid InterestExpense…On December 31, 2020, American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,000,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,000,000 to $2,400,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each year. On January 1, 2024, Barkley Company pays $2,400,000 in cash to American Bank. Instructions a. Will the gain recorded by Barkley be equal to the loss recorded by American Bank under the debt restructuring? Explain. b. Can Barkley Company record a gain under the term modification mentioned above? Explain. c. Assuming that the interest rate Barkley should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Barkley Company…
- On December 31, 2020, American Bank enters into a debt restructuring agreement with Flint Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $ 2,110,000 note receivable by the following modifications: 1. Reducing the principal obligation from $ 2,110,000 to $ 1,688,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Flint pays interest at the end of each year. On January 1, 2024, Flint Company pays $ 1,688,000 in cash to American Bank. Assuming that the interest rate Flint should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Flint Company after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.)Assuming that the interest rate Flint should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the…On December 31, 2025, American Bank enters into a debt restructuring agreement with Teal Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,300,000 note receivable by the following modifications: Reducing the principal obligation from $3,300,000 to $2,220,000. Extending the maturity date from December 31, 2025, to January 1, 2029. Reducing the interest rate from 12% to 10%. Teal pays interest at the end of each year. On January 1, 2029, Teal Company pays $2,220,000 in cash to American Bank. (a) Can Teal Company record a gain under this term modification? If yes, compute the gain for Teal Company. If no, enter amount as 0. The gain for Teal Company $On December 31, 2023, Green Bank enters into a debt restructuring agreement with Teal Mountain Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.1-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2.1 million to $2.00 million Extending the maturity date from December 31, 2023, to December 31, 2026 3. Reducing the interest rate from 10% to 8% 2. Teal Mountain pays interest at the end of each year. On January 1, 2027, Teal Mountain pays $2.00 million in cash to Green Bank. Teal Mountain prepares financial statements in accordance with IFRS 9. (b) Prepare an entry at December 31, 2023, based on the results of your calculation. (Round answers to 0 decimal places, e.g. 5,275. 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. List debit entry…
- On December 31, 2023, Green Bank enters into a debt restructuring agreement with Windsor Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.9-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2.9 million to $2.76 million 2. Extending the maturity date from December 31, 2023, to December 31, 2026 3. Reducing the interest rate from 10% to 8% Windsor pays interest at the end of each year. On January 1, 2027, Windsor pays $2.76 million in cash to Green Bank. Windsor prepares financial statements in accordance with IFRS 9. Assume instead that Windsor follows ASPE. Using (1) a financial calculator or (2) Excel function Rate, calculate the rate of interest that Windsor should use to calculate its interest expense in future periods. (Hint: Refer to Chapter 3 for tips on calculating.) (Round answer to 4 decimal places, e.g. 1.2246%.) Rate of interest %On December 31, 2023, Green Bank enters into a debt restructuring agreement with Windsor Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.9-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2.9 million to $2.76 million 2. Extending the maturity date from December 31, 2023, to December 31, 2026 3. Reducing the interest rate from 10% to 8% Windsor pays interest at the end of each year. On January 1, 2027, Windsor pays $2.76 million in cash to Green Bank. Windsor prepares financial statements in accordance with IFRS 9. Prepare the interest payment entry for Windsor on December 31, 2025, and the entry on January 1, 2027. (Round answer to O decimal places, e.g. 5,275. 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. List all debit entries…On December 31, 2019, GMC had a document payable with a value in the $ 100,000 books. GMC has faced economic difficulties that have not allowed to meet the payment of this debt. Suppose that on the date mentioned the The bank agreed to change the terms of the loan as follows: the principal (maturity value) was reduced to $ 80,000, the expiration date was changed to 31 December 2022, and the contractual interest rate was reduced from 15% to 10%. Determine the effect of this restructuring of debt on the Net Income of GMC on 12/31/19. to. GMC is going to report a profit of $ 20,000. b. GMC will report a profit equal to 5% of the principal. c. GMC is going to report a profit of $ 4,000. d. When the terms of the contract are adjusted, the debtor does NOT report earnings.
- On December 31, 2023, Crane Bank enters into a debt restructuring agreement with Troubled Inc., which is now experiencing financial trouble. The bank agrees to restructure a $1.0-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $1.0 million to $0.80 million Extending the maturity date from December 31, 2023, to December 31, 2026 Reducing the interest rate from 10% to 9% 2. 3. Troubled pays interest at the end of each year. On January 1, 2027, Troubled Inc. pays $0.80 million in cash to Crane Bank for the principal. The market rate is currently 9%. Answer the following questions related to Crane Bank (the creditor). Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. What interest rate should Crane Bank use to calculate the loss on the debt restructuring? Interest rate List of Accounts 10 % Using (1) factor tables, (2) a financial calculator, or…CPA Bank Co. loaned P4,000,000 to a borrower on January 1, 2018. The terms of the loan require principal payments of P800,000 each year for 5 years plus interest at 8%.The first principal and interest payment is due on January 1, 2019. The borrower made the required payments during 2019 and 2020. However, during 2020 the borrower began to experience financial difficulties, requiring the bank to reassess the collectability of the loan. On December 31, 2020, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2020. The present value of 1 at 8% is 0.93 for one period, O.86 for two periods and 0.79 for three periods. At what amount is loan receivable presented in the statement of financial position on December 31, 2021?VKS Bank loaned P5,000,000 to IntAcc1 Company on January 1, 2018. The terms of the loan require principal payments of P1,000,000 each year on December 31 for 5 years plus interest at 8%. The first principal and interest payment is due on December 31, 2018. IntAcc1 Company made the required payments during 2018 and 2019. However, during 2020 IntAcc1 Company began to experience financial difficulties and was not able to pay the next installment of principal and interest, this required VKS to reassess the collectibility of the loan. On December 31, 2021, Sinopharm determined that the remaining principal payment will be collected starting December 31, 2022 but the collection of the interest is unlikely. Assume that VKS accrued interest on December 31, 2020 but did not continue to accrue interest because of its uncollectibillity. Use two-decimal places for PV factors. What is the loan impairment loss on December 31, 2021?