QUELL Co. owes PUT DOWN Bank P4,000,000 plus accrued interest of P360,000. The unamortized discount on the loan is P80,000. The debt is a 10-year, 12% loan. During 20x1, QUELL'S business deteriorated due to loss of demand for its services. On December 31, 20x1, PUT DOWN Bank agrees to accept old equipment and cancel the entire debt. The equipment has a cost of P12,000,000, accumulated depreciation of P8,800,00, and fair value of P3,600,000. How much is the gain (loss) on the extinguishment of the debt?
Q: 2. Utok Company owes P2,000,000 plus P180,000 of accrued interest to Alambre State Bank. The debt is…
A: De -recogntion: It is the removal of an asset or liability from an entity's balance sheet.
Q: On December 31, 20x3, the carrying value of the loan receivable is approximately
A: Interest is the periodic obligation of the borrower to pay towards the sum borrowed. It is computed…
Q: This Company defaulted in two annual interest payments on its P4,000,000 loan. Because of the…
A: As per IFRS 9, Financial instruments, the interest expense on the financial liability is recognized…
Q: On January 31$t, 2021, X Co. transfers $400,000 in receivables to Cater Finance with recourse. Cater…
A: Amount Retained by Cater Finance: Factored Receivables $ 400,000 10% of Factored…
Q: At January 1, 2016, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due…
A:
Q: On December I, Year 1, Traylor Company sells $100,000 of short-term trade receiv- ables to Main…
A: Derecognition is made for removal of any previous recognized financial asset or liability from the…
Q: Anteium Company owes $80,000 on a note payable that is currently due. The note is held by a local…
A: a. The note payable amount of $80,000 would be reported in the statement of financial affairs. The…
Q: On December 31, 2010 a company was indebted to Creditor Co. on a P2,000,000 10% note. Only interest…
A: On 31.12.2010, 10% Notes payable = P2000000 Interest rate = 10% Interest amount per annum = P2000000…
Q: On April 1, 2021, JPG Company sold for P84,000 a stereo which paid had a cost of P54,600. A down…
A: Sales value = P84,000 Cost = P54,600 Down payment = P9,000 Additional payment = P7,500 × 4 months…
Q: Due to extreme financial difficulties, an entity negotiated a restructuring of 10%, P5,000,000 note…
A:
Q: Lolo Co. owes $150,000 in notes payable plus $12,000 of accrued interest to, the company is having…
A: The company can raise fund by borrowing the cash. If the cash is borrowed by issuing notes payable,…
Q: On January 1, 20X9, Fast Bank made a P2,000,000, 8% loan. The P160,00O interest is receivable at the…
A: Given: Carrying value of Loan=$2,000,000Rate of loan =8%Interest receivable every year =$160,000PV…
Q: In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of…
A: NOTE : As per BARTLEBY guidelines, when multiple sub parts are given then first three sub parts are…
Q: Prepare the journal entries to record the preceding information on Singer’s accounting records.…
A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…
Q: Dayannara Bank loaned P5,000,000 to Dama Company on January 1, 2007. The terms of the loan require…
A: In order to determine the impairment loss, the present value of the loan is required to be…
Q: On Dec. 31, 20x1, Tissue Co. determines that its loan receivable from Breakfast Co. with a carrying…
A: Loan is an amount which a lender gives to a borrower to fulfil the financial need of the borrower at…
Q: Bank charged XYZ a 6-point non-refundable loan origination fee. The effective interest after…
A: Loan given by bank to its customer is treated as Financial Asset for bank and it will be a financial…
Q: On January 1, 2019, Pigero Company took 3-year, P4,000,000 loan from a bank. The loan agreement…
A: Computation of the current liability to the loan in Pigero's 2019 year end financial statement is…
Q: On December 31, 2020, the Reliable Finance Company had P5,000,000 notes receivable from Burgundy…
A: When there are certain indications that the recoverable amount from the asset has been declined…
Q: On January 1, 20X9, Fast Bank made a P2,000,000, 8% loan. The P160,000 interest is receivable at the…
A: The original amount of the loan =2,000,000. It is mentioned that the borrower is experiencing…
Q: Strickland Company owes $200,000 plus $18,000 of accrued interest to Moran State Bank. The debt is a…
A: 1. Prepare journal entries for Strickland Company and Moran State Bank to record this debt…
Q: Larkspur Co. owes $202,500 to Cullumber Inc. The debt is a 10-year, 11% note. Because Larkspur Co.…
A: Gain on Land Disposition = fair value - book value = $146,600 - $92,800 = $53,800
Q: borrowing. BB gave a 14% note for P450,000 representing 90% of the assigned accounts and received…
A: In our question, BB Corp. has borrowed the loan amount of P 500,000 from Finance Company. So in the…
Q: Jade Larson Antiques owes $20,000 on a truck purchased for use in the business. Assume the company…
A:
Q: Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank.…
A: Total cash received = Accounts receivable X % remit = $60,000 x 90% = $54,000 Receivable from factor…
Q: Jade Larson Antiques owes $20,000 on a truck purchased for use in the business. Assume the company…
A: Long-term notes payable: Long-term notes payable represent a legal and written promise made by the…
Q: Due to extreme financial difficulties, an entity negotiated a restructuring of 10%, P5,000,000 note…
A: Present Value-:Present Value also known as the current value of a prospective quantity of capital or…
Q: Bank CO approved a loan application of Client ME on January 1, 20A for P3,500,000. Client ME is…
A: A contra account is used in a general ledger to reduce the value of a connected account when the two…
Q: On December 31, 2020, the Reliable Finance Company had P5,000,000 notes receivable from Burgundy…
A: Working Notes: Computation of present value of restructured notes receivable. 400000 * 0.83 =…
Q: On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day .…
A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: APA and Co., Inc. purchased a Cadillac automobile with little cash down and signed a note, secured…
A: Given data, balance due on the Cadillac=P6,000,000 Book value of car=P8,000,000 Net realizable value…
Q: Megabank granted an 8% 3-year loan to Global Company on January 1, 2018. The interest on the loan is…
A: Step 1 An amortized loan is a loan accounting over the tenure of loan subject to the cash flows over…
Q: On January 1, year 1, Suzette Company signed a franchise agreement for a period of 20 years for an…
A: Intangible assets are the assets which are amortized over the certain life of the asset. It includes…
Q: On December 31, 2020, the Reliable Finance Company had P5,000,000 notes receivable from Burgundy…
A: Impairment loss refers to the substantial decline in the carrying value of asset. It is calculated…
Q: 4. The company discounted € 10,000 bills, collecting € 9,500, which were deposited in the company's…
A: As per our protocol we provide solution to the first three sub-parts only but as you have asked the…
Q: Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank.…
A: Journal entry is a primary entry that records the financial transactions initially.
Q: Mozely Company borrowed $400,000 on a 10 percent note payable to finance a new warehouse Mozely is…
A: Solution:- Calculation of the capitalize interest for the current year as follows under:-
Q: Gottlieb Co. owes $199,800 to Ceballos Inc. The debt is a 10-year, 11% note. Because Gottlieb Co. is…
A: a.
Q: CPA Co. received from a customer a one-year, P1,000,000 note bearing annual interest of 10%. After…
A: Factoring is the financial institution where firm can sell their account receivable at a discount…
Q: On December 31, 2021, Empoy Company has overdue notes payable of P5,000,000 with accrued interest of…
A:
Q: On. Nov. 14, 20x1, Athena Co. sold its P30,000 loan receivable from Zevrek Co. to Devin Bank for…
A: Formula: Discount on Loan receivable = Total loan receivable - Cash received
Q: Ames, Inc. has $500,000 of notes payable due June 15, year 3. Ames signed an agreement on December…
A: The company can borrow funds for expansion or to purchase the capital assets. The borrowing can be…
Q: On January 1, 2011, SVTA Bank extended a P1,200,000 loan to ABC, Inc. Principal is due on December…
A: Jan -2011 loan sanctioned for 1200000 Rate of Interest 11% Re payment terms, Interest to be paid…
Q: Eastwest Bank extended a 3-year $5,000,000 loan to Nick Company on January 1, 2020. The interest…
A: As per amortized method, the transaction is recognized at transaction price less transaction cost…
Q: At January 1, 2018, NCI Industries, Inc., was indebted to First Federal Bank under a $240,000, 10%…
A: 1 ) Calculation of Present value of debt = ( $240,000 + ( $240,000 x 10 % ) )…
Q: On January 1, 20x1, ABC Bank extended a 10%, P1,000,000 loan to XYZ. Principal is due on January 1,…
A: Loan given by bank to its customer is treated as Financial Asset for bank and it will be a financial…
How much is the gain (loss) on the extinguishment of the debt?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- On January 1, Kilgore Inc. accepts a 20,000 non-interest-bearing, 5-year note from Dieland Company for equipment. Neither the fair value of the note nor the equipment is determinable. Kilgore had originally purchased the equipment for 18,000, and the equipment has a book value of 14,000 on January 1. Kilgore knows Dielands incremental borrowing rate of 9%. Prepare the journal entry for Kilgore to record the sale of the equipment on January 1.QUELL Co. owes PUT DOWN Bank F4,000,000 plus accrued interest of P360,000. The unamortized discount on the loan is P80,000. The debt is a 10-year, 12% loan. During 20x1, QUELL's business deteriorated due to loss of demand for its services. On December 31, 20x1, PUT DOWN Bank agrees to accept old equipment and cancel the entire debt. The equipment has a cost of P12,000,000, accumulated depreciation of P8,800,000, and fair value of P3,600,000. How much is the gain (loss) on the extinguishment of the debt?a. 1,800,000b. 760,000c. (1,800,000)d. 1,080,000Kwell Co. owes Kuto Bank P4,000,000 plus accrued interest of P360,000. The unamortized discounton the loan is P80,000. The debt is a 10-year, 12% loan. During 20x1, Kwell’s business deteriorateddue to loss of demand for its services. On December 31, 20x1, Kuto Bank agrees to accept oldequipment and cancel the entire debt. The equipment has a cost of P12,000,000, accumulateddepreciation of P8,800,000 and fair value of P3,600,000. How much is the gain (loss) on theextinguishment of the debt?
- JKL Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Assuming that all accounts are collected, what is the gain or (loss) on factoring the accounts receivable? *GHI Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Compute the amount of cash initially received from the factoring. *On April 1, 2020, Super Enterprises sold $750,000 of accounts receivable to Convenience Factors, Inc. on a basis with recourse basis. The recourse obligation has a fair value of $9,000. Super Enterprises will continue to manage the customer accounts, including their collection. Super Enterprises estimates this obligation has a liability value of $12,500. Convenience Factors assesses a finance charge of 4% of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable. Required: a) Assume Super Enterprises follows ASPE and the control of receivables has been given up to Convenience Factors. Prepare the journal entry required on Super's books on April 1, 2020. b) Assume Super Enterprises follows IFRS, prepare the journal entry required on Super's books on April 1, 2020. (Show all supporting calculations)
- MNL Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Assuming that all accounts are not collected, what is the gain or (loss) on factoring?DEF Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Compute the amount of cash initially received from the factoring.On January 1, 2001, XDR Bank extended a P900,000 loan to SRN, Inc. Principal is due on December 31, 2005 but 12% interest is due annually every December 31. On December 31, 2003, SRN, Inc. was delinquent and it was ascertained that the loan is impaired. XDR Bank assessed that interests accruing on the loan will not be collected; however, the principal is expected to be received in three equal annual installments starting on December 31, 2004. Accrued interest receivable on December 31, 2003 amounted to P100,000. The current market rate on December 31, 2003 is 14%. How much is the balance of allowance for impairment loss on December 31, 2003 immediately after impairment testing?
- Guasha Corp. factored P600,000 of accounts receivable to Stalactite Corp. on October 1, 2020. Control was surrendered by Guasha. Stalactite accepted the receivables subject to recourse for nonpayment. Stalactite assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, Stalactite charged 15% interest computed on a weighted-average time to maturity of the receivables of fifty-four days. The fair value of the recourse obligation is P9,000. Maria will receive and record cash of:On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day . It is a $3,300,000 8% issued at par note, payable to Key Bank. Key Bank agrees to accept from Nicholas equipment that has a fair value of 1,450,000, originally costing $2,400,000, with accumulated depreciation of $1,250,000. Key Bank also extends the maturity date to December 31, 2021, reduces the face amount of the note to $1,250,000, and reduces the interest rate to 6%, with interest payable at the end of each year. a. Nicholas should recognize a gain or loss on the transfer of the equipment of: b. At the end of each of the next three years Nicholas records the $ 75,000 interest paid to Key Bank as a: c. In determining the carrying value of the note at December 31, 2018 Key Bank uses an effective interest rate equal to: d. Key Bank records a loss on restructuring of: e. In recording the loss on restructuring, Key bank:5. Packwood, Inc. factors $250,000 of its accounts receivable to M&B Finance with recourse. M&B charges a fee of 1% and withholds 10% of the face amount of the receivables to cover possible uncollectible accounts and sales returns. The bank deducts the fee from the cash given to Packwood at the outset of the arrangement. Packwood estimates the fair value of the recourse obligation is equal to $6,000. Packwood estimates the fair value of the 10% of the face amount of receivables equals $22,500. Packwood does not retain control over the factored receivables. Prepare any journal entries Packwood, Inc. would make to record the factoring.