Use the following information for questions 6 and On December 31, 2018, Garnel Co. is in financial difficulty and cannot pay a note due that day. It is a $600,000 note with $60,000 actrued interest payable to Fred Co.. Fred agrees to accept from Garnel a building that has a fair value of $590,000, an original cost of $530,000, and accumulated depreciation of $130,000. Garnel should recognize a gain or loss on the disposal of the building of Select one: O a. $0. O b. $70,000 loss. Oc. $60,000 gain. O d. $190,000 gain
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- On January 1, 2021, Ree Company sold a machine to Say Company. In lieu of cash payment, Say gave Ree a 5-year, P500,000 note. The machinery has a cost of P500,000 and accumulated depreciation as of January 1, 2021 of P150,000. The note is a non-interest bearing note and the prevailing rate of interest for a note of this type is 10%. Required: Answer the following questions: (Round off PV factors to 4 decimal places before multiplying.) 1. Current portion of the notes receivable 2. Non current portion of the notes receivableOn December 31, 2018, Nolte Co. is in financial difficulty and cannot pay a note due that day. It is a $3,000,000 note with $300,000 accrued interest payable to Piper, Inc. Piper agrees to accept from Nolte equipment that has a fair value of $1,450,000, an original cost of $2,400,000, and accumulated depreciation of $1,150,000. Nolte should recognize a gain or loss on the transfer of the equipment of O $0 O $200,000 gain O $300,000 gain O $950,000 lossOn January 1, 2021, Ree Company sold a machine to Say Company. In lieu of cash payment, Say gave Ree a 5-year, P500,000 note. The machinery has a cost of P500,000 and accumulated depreciation as of January 1, 2021 of P150,000. The note is a non-interest bearing note and the prevailing rate of interest for a note of this type is 10%. Required: Answer the following questions: (Round off PV factors to 4 decimal places before multiplying.) 1. Gain or loss on sale of machinery (place parenthesis if loss) 2. Interest income
- In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of P6,000,000. On the note’s due date, December 31, 2X21, Land owed P480,000 of accrued interest and P6,000,000 on the note. Land was in financial difficulty and was unable to make any payments. To solve the problem, Land and the bank agreed to amend the note as follows: • Extended the maturity to December 31, 2X23. • The P480,000 interest due on December 31, 2X21 was forgiven. • Land Corporation would be required to make an annual interest payment of P540,000 every December 31 starting 2X22. • Transaction cost incurred that is directly related to the debt restructuring was P16,850. As of December 31, 2X21, the yield rate based on the restructured debt and after considering the amount of transaction cost is 6.24%. 5. What type of debt restructuring is being described by the case? 6. What is the total gain from restructuring? 7. What amount should Land Corporation report…In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of P6,000,000. On the note’s due date, December 31, 2X21, Land owed P480,000 of accrued interest and P6,000,000 on the note. Land was in financial difficulty and was unable to make any payments. To solve the problem, Land and the bank agreed to amend the note as follows: • Extended the maturity to December 31, 2X23. • The P480,000 interest due on December 31, 2X21 was forgiven. • Land Corporation would be required to make an annual interest payment of P540,000 every December 31 starting 2X22. • Transaction cost incurred that is directly related to the debt restructuring was P16,850. As of December 31, 2X21, the yield rate based on the restructured debt and after considering the amount of transaction cost is 6.24%. 8. What is the carrying amount of the obligation that should be reported in 2X22 statement of financial position? 9. Provide the journal entry for debt…In 2X19, Land Corporation acquired land by paying P2,000,000 and signing a note with a face value of P6,000,000. On the note’s due date, December 31, 2X21, Land owed P480,000 of accrued interest and P6,000,000 on the note. Land was in financial difficulty and was unable to make any payments. To solve the problem, Land and the bank agreed to amend the note as follows: • Extended the maturity to December 31, 2X23. • The P480,000 interest due on December 31, 2X21 was forgiven. • Land Corporation would be required to make an annual interest payment of P540,000 every December 31 starting 2X22. • Transaction cost incurred that is directly related to the debt restructuring was P16,850. As of December 31, 2X21, the yield rate based on the restructured debt and after considering the amount of transaction cost is 6.24%. 5. What type of debt restructuring is being described by the case? 6. What is the total gain from restructuring? 7. What amount should Land Corporation report…
- On January 1, 2017, Lombard Co. sells property forwhich it had paid $690,000 to Sargent Company, receivingin return Sargent’s zero-interest-bearing note for$1,000,000 payable in 5 years. What entry would Lombardmake to record the sale, assuming that Lombardfrequently sells similar items of property for a cash salesprice of $640,000?Tasa Incorporated after having experienced financial difficulties in 2021, negotiated with a major creditor and arrived at an agreement to restructure a note payable on December 31, 2021. The creditor was owed a principal of P3,600,000 and interest of P400,000 but agreed to accept equipment worth 850,000 and a note receivable from Tasa's customer with carrying amount of P2,700,000. The equipment had an original cost of P900,000 and an accumulated depreciation of 300,000. a.What amount should be recognized as gain from extinguishment of debt on December 31, 2021?On December 31, 2018, Sunland Company is in financial difficulty and cannot pay a note due that day. It is a $3100000 note with $310000 accrued interest payable to Wildhorse, Inc. Wildhorse agrees to accept from Sunland equipment that has a fair value of $1460000, an original cost of $2400000, and accumulated depreciation of $1140000. Wildhorse also forgives the accrued interest, extends the maturity date to December 31, 2021, reduces the face amount of the note to $1260000, and reduces the interest rate to 6%, with interest payable at the end of each year.Sunland should recognize a gain on the partial settlement and restructure of the debt of $0. $363200. $463200. $75600.
- On January 1, 2025, Splish Co. sells land for which it had paid $705,700 to Sargent Company, receiving in return Sargent's zero- interest-bearing note for $900,000 payable in 5 years. What entry would Splish make to record the sale, assuming that Splish frequently sells similar items of land for a cash sales price of $650,000? (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries) Date Account Titles and Explanation Jan. 1 Debit CreditOn January 1, 2021, Beauty Company sold a machine with a cost of P500,000 and accumulated depreciation of P350,000 to Gee Company. In lieu of cash payment, Gee Company gave Beauty Company a 4-year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The 10% interest rate is a realistic rate of interest for a note of this type. Required: Compute the following as of December 31, 2021: (Round off PV factors to 4 decimal places before multiplying.) 4. Current portion of notes receivable Answer 5. Noncurrent portion of notes receivableOn January 1, 2021, Beauty Company sold a machine with a cost of P500,000 and accumulated depreciation of P350,000 to Gee Company. In lieu of cash payment, Gee Company gave Beauty Company a 4-year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The 10% interest rate is a realistic rate of interest for a note of this type. Required: Compute the following as of December 31, 2021: (Round off PV factors to 4 decimal places before multiplying.) 1. Effective interest rate 2. Gain or loss on sale of machinery (place parenthesis if loss) 3. Interest income