Dollar amount of each payment J receives. Amortization: Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

Question

. Jan sold her house on December 31 and took a $10,000 mortgage aspart of the payment. The 10-year mortgage has a 10% nominal interest rate, but it calls forsemiannual payments beginning next June 30. Next year Jan must report on Schedule B ofher IRS Form 1040 the amount of interest that was included in the two payments she receivedduring the year.a. What is the dollar amount of each payment Jan receives?b. How much interest was included in the first payment? How much repayment of principalwas included? How do these values change for the second payment?c. How much interest must Jan report on Schedule B for the first year? Will her interestincome be the same next year?d. If the payments are constant, why does the amount of interest income change over time? Please show solution and formula. Show manual computation (not in excel or accounting calculator) Thank you

Answer 1

Question

Chapter 5, Problem 22P

a.

Summary Introduction

To compute: Dollar amount of each payment J receives.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

b.

Summary Introduction

To compute: Interest that is included in the first payment, repayment of principal,changes in value for second payment.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

c.

Summary Introduction

To Explain: interest on Schedule B for the next year and income in the next year.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

(d)

Summary Introduction

To explain: Change in amount of interest income on the constant amount over atime period.

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. Jan sold her house on December 31 and took a $10,000 mortgage aspart of the payment. The 10-year mortgage has a 10% nominal interest rate, but it calls forsemiannual payments beginning next June 30. Next year Jan must report on Schedule B ofher IRS Form 1040 the amount of interest that was included in the two payments she receivedduring the year.a. What is the dollar amount of each payment Jan receives?b. How much interest was included in the first payment? How much repayment of principalwas included? How do these values change for the second payment?c. How much interest must Jan report on Schedule B for the first year? Will her interestincome be the same next year?d. If the payments are constant, why does the amount of interest income change over time? Please show solution and formula. Show manual computation (not in excel or accounting calculator) Thank you

Jan sold her house on December 31 and took a $10,000 mortgage aspart of the payment. The 10-year mortgage has a 10% nominal interest rate, but it calls forsemiannual payments beginning next June 30. Next year Jan must report on Schedule B ofher IRS Form 1040 the amount of interest that was included in the two payments she receivedduring the year.a. What is the dollar amount of each payment Jan receives?b. How much interest was included in the first payment? How much repayment of principalwas included? How do these values change for the second payment?c. How much interest must Jan report on Schedule B for the first year? Will her interestincome be the same next year?d. If the payments are constant, why does the amount of interest income change over time?

6. Loan Amortization Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $30,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 12%; it calls for payments every 6 months, beginning on June 30, and is to be amortized over 10 years. Now, 1 year later, your aunt must inform the IRS and the person who bought the house about the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest cent, what is the total amount of interest that was paid during the first year? Do not round intermediate calculations. Round your answer to the nearest cent. $

Answer 2

Question

Chapter 5, Problem 22P

a.

Summary Introduction

To compute: Dollar amount of each payment J receives.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

b.

Summary Introduction

To compute: Interest that is included in the first payment, repayment of principal,changes in value for second payment.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

c.

Summary Introduction

To Explain: interest on Schedule B for the next year and income in the next year.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

(d)

Summary Introduction

To explain: Change in amount of interest income on the constant amount over atime period.

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Answer 3

Question

Chapter 5, Problem 22P

a.

Summary Introduction

To compute: Dollar amount of each payment J receives.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

b.

Summary Introduction

To compute: Interest that is included in the first payment, repayment of principal,changes in value for second payment.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

c.

Summary Introduction

To Explain: interest on Schedule B for the next year and income in the next year.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

(d)

Summary Introduction

To explain: Change in amount of interest income on the constant amount over atime period.

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Answer 4

Question

Chapter 5, Problem 22P

a.

Summary Introduction

To compute: Dollar amount of each payment J receives.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

b.

Summary Introduction

To compute: Interest that is included in the first payment, repayment of principal,changes in value for second payment.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

c.

Summary Introduction

To Explain: interest on Schedule B for the next year and income in the next year.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

(d)

Summary Introduction

To explain: Change in amount of interest income on the constant amount over atime period.

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Answer 5

Chapter 5, Problem 22P

a.

Summary Introduction

To compute: Dollar amount of each payment J receives.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

b.

Summary Introduction

To compute: Interest that is included in the first payment, repayment of principal,changes in value for second payment.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

c.

Summary Introduction

To Explain: interest on Schedule B for the next year and income in the next year.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

(d)

Summary Introduction

To explain: Change in amount of interest income on the constant amount over atime period.

Answer 6

Chapter 5, Problem 22P

a.

Summary Introduction

To compute: Dollar amount of each payment J receives.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

Answer 7

Chapter 5, Problem 22P

a.

Summary Introduction

To compute: Dollar amount of each payment J receives.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

Answer 8

b.

Summary Introduction

To compute: Interest that is included in the first payment, repayment of principal,changes in value for second payment.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

Answer 9

b.

Summary Introduction

To compute: Interest that is included in the first payment, repayment of principal,changes in value for second payment.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

Answer 10

c.

Summary Introduction

To Explain: interest on Schedule B for the next year and income in the next year.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

Answer 11

c.

Summary Introduction

To Explain: interest on Schedule B for the next year and income in the next year.

Amortization:

Amortization is to write off or pay the debt over the period of time it can be for a loan or intangible assets. Its purpose is to get cost recovery. Example of amortization is, an automobile firm have made a spending of $20 million dollars on a design patent with a useful life of twenty years. The company’s amortization value will be $1 million for every year.

Answer 12

(d)

Summary Introduction

To explain: Change in amount of interest income on the constant amount over atime period.

Answer 13

(d)

Summary Introduction

To explain: Change in amount of interest income on the constant amount over atime period.

Answer 14

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Answer 25

Ch. 5 - Prob. 1Q Ch. 5 - Explain whether the following statement is true or...Ch. 5 - If a firms earnings per share grew from 1 to 2...Ch. 5 - Would you rather have a savings account that pays...Ch. 5 - Prob. 5Q Ch. 5 - Prob. 6Q Ch. 5 - Banks and other lenders are required to disclose a...Ch. 5 - Prob. 8Q Ch. 5 - FUTURE VALUE If you deposit 2,000 in a bank...Ch. 5 - PRESENT VALUE What is the present value of a...

Solution Summary: The author explains that amortization is to write off or pay debt over the period of time it can be for a loan or intangible assets.

Concept explainers

To explain: Change in amount of interest income on the constant amount over atime period.

Chapter 5 Solutions