Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 13, Problem 13.18DMP
(1)
To determine
Loss Contingencies
Loss contingency is a contingency where existing situation or circumstances where potential losses are resolved and thus, future events are occurred. Examples for loss contingency are as follows:
- 1. Possible repair to a product under any warranty
- 2. Defendant in a lawsuit
- 3. Uncollectible receivables
To explain: The reason reports this charge of over $1 billion entirely in one quarter.
(2)
To determine
To explain: the conservatives of warranty estimate.
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9
nts
3
O 03:06:29
You've worked out a line of credit arrangement that allows you to borrow up to $55
million at any time. The interest rate is .59 percent per month. In addition, 4 percent of
the amount that you borrow must be deposited in a non-interest-bearing account.
Assume that your bank uses compound interest on its line of credit loans.
a. What is the effective annual interest rate on this lending arrangement? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2 decimal
places, e.g., 32.16.)
b. Suppose you need $23 million today and you repay it in 6 months. How much interest
will you pay? (Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
a. Annual interest rate
b. Interest paid
Answer is not complete.
7.32 X %
Problem 6-15 Calculating APR [LO4]
Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 15.2 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Q 12 –Khamis Electronics issues a $700,000, 10-year, 7% mortgage note payable on December
31, 2020, to help finance a plant expansion. The terms of the note provide for semi-annual
blended payments of $49,253. Payments are due on June 30 and December 31.
Instructions
4
(a). Prepare an instalment payment schedule for the first two years. Round all
calculations to the nearest dollar.
(b). Prepare the entries for (1) the loan and (2) the first two instalment payments on June
30, 2021, and December 31, 2021.
(c). Show how the total mortgage liability should be reported on the balance sheet at
December 31, 2021.
Chapter 13 Solutions
Intermediate Accounting, 10 Ed
Ch. 13 - What are the essential characteristics of...Ch. 13 - Prob. 13.2QCh. 13 - Bronson Distributors owes a supplier 100,000 on...Ch. 13 - Bank loans often are arranged under existing lines...Ch. 13 - Prob. 13.5QCh. 13 - Prob. 13.6QCh. 13 - Salaries of 5,000 have been earned by employees by...Ch. 13 - Prob. 13.8QCh. 13 - Prob. 13.9QCh. 13 - Prob. 13.10Q
Ch. 13 - Prob. 13.11QCh. 13 - Prob. 13.12QCh. 13 - Long-term obligations usually are reclassified and...Ch. 13 - How do IFRS and U.S. GAAP differ with respect to...Ch. 13 - Prob. 13.15QCh. 13 - Prob. 13.16QCh. 13 - Prob. 13.17QCh. 13 - Prob. 13.18QCh. 13 - Suppose the analysis of a loss contingency...Ch. 13 - Prob. 13.20QCh. 13 - Distinguish between the accounting treatment of a...Ch. 13 - At December 31, the end of the reporting period,...Ch. 13 - After the end of the reporting period, a...Ch. 13 - Prob. 13.24QCh. 13 - Prob. 13.25QCh. 13 - Prob. 13.26QCh. 13 - Prob. 13.27QCh. 13 - Prob. 13.28QCh. 13 - Bank loan; accrued interest LO132 On October 1,...Ch. 13 - Non-interest-bearing note; accrued interest LO132...Ch. 13 - Determining accrued interest LO132 On July1,...Ch. 13 - Commercial paper LO132 Branch Corporation issued...Ch. 13 - Non-interest-bearing note; effective interest rate...Ch. 13 - Sales tax LO133 DuringDecember, Rainey Equipment...Ch. 13 - Prob. 13.12BECh. 13 - Prob. 13.13BECh. 13 - Contingency LO135, LO136 Skill Hardware is the...Ch. 13 - Contingency LO135, LO136 Bell International can...Ch. 13 - Prob. 13.16BECh. 13 - Prob. 13.17BECh. 13 - FASB codification research LO133, LO134, LO135...Ch. 13 - Current noncurrent classification of debt; Sprint...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.14ECh. 13 - Extended warranties LO135, LO136 Carnes...Ch. 13 - Disclosures of liabilities Indicate (by letter)...Ch. 13 - Prob. 13.11PCh. 13 - Prob. 13.2DMPCh. 13 - Prob. 13.3DMPCh. 13 - Prob. 13.4DMPCh. 13 - Prob. 13.18DMPCh. 13 - Real World Case 1319 Contingencies LO135 Real...Ch. 13 - Prob. 1CCTCCh. 13 - Prob. 2CCTC
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