Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 2, Problem 13PC
a.
To determine
Indicate the effect of market value changes and sale of asset using valuation of note at present value of future cash flow at historical interest rate of 8%.
b.
To determine
Indicate the effect using the fair value changes in the market interest rates and including unrealized gains and losses.
c.
To determine
Explain the reason for similar retained earnings in case ‘a.’ and case ‘b’.
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What is the carrying amount of the note as of December 31, 2022?
On January 1, 2022. TGIG sold equipment with a historical cost of P10,000,000 and accumulated
depreciation of P5,500,000 in exchange for a P6,000,000 non-interest-bearing note due in annual
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December 31. 2022 - 3, 000, 000
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December 31 2024 - 1, 000, 000
There was no exchange price for the equipment. The prevailing rate of interest for a note of this type on
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On January 1, 2017, Persephone Company sold a piece of transportation equipment with a
historical cost of P1,000,000 and accumulated depreciation of P300,000 in exchange for cash
of P100,000 and a noninterest-bearing note receivable of P800,000 due on January 1, 2020.
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2017?
(Note Transactions at Unrealistic Interest Rates) On July 1, 2017, Agincourt Inc. made two sales.1. It sold land having a fair value of $700,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,101,460. The land is carried on Agincourt’s books at a cost of $590,000.2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $400,000 (interest payable annually).
Agincourt Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest.
InstructionsRecord the two journal entries that should be recorded by Agincourt Inc. for the sales transactions above that took place on July 1, 2017.
Chapter 2 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
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