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If carrying amount is less than future cash flow, it means loss will be recorded by creditors.
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In a troubled debt restructuring in which the debt is continued with modified terms and the...
Question 34 In a debt extinguishment in which the debt is continued with modified terms and...
Question 34 In a debt extinguishment in which the debt is continued with modified terms and the carrying value of the debt is more than the fair value of the debt, a loss should be recognized by the debtor. a new effective-interest rate must be computed. no interest expense should be recognized in the future. a gain should be recognized by the debtor. Question 35 Many companies believe that off-balance-sheet financing is attempting to conceal the debt from shareholders by...
Help Save & Exit Subm Check my work Exercise 14-35 Troubled debt restructuring: modification of terms;...
Help Save & Exit Subm Check my work Exercise 14-35 Troubled debt restructuring: modification of terms; unknown effective rate [Appendix B] At January 1, 2018, NCI Industries, Inc. was indebted to First Federal Bank under a $252,000, 8% unsecured note. The note was signed January 1,2014, and was due December 31, 2019. Annual interest was last paid on December 31, 2016. NCI was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. First Federal...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Marin Company, which...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Marin Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $4,310,000 note receivable by the following modifications: 1. Reducing the principal obligation from $4,310,000 to $3,448,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Marin pays interest at the end of each year. On January...
Exercise 14-23 (Part Level Submission) On December 31, 2020, Cullumber Bank enters into a debt restructuring...
Exercise 14-23 (Part Level Submission)
On December 31, 2020, Cullumber Bank enters into a debt
restructuring agreement with Barkley Company, which is now
experiencing financial trouble. The bank agrees to restructure a
12%, issued at par, $3,900,000 note receivable by the following
modifications:
1.
Reducing the principal obligation from $3,900,000 to
$3,120,000.
2.
Extending the maturity date from December 31, 2020, to January
1, 2024.
3.
Reducing the interest rate from 12% to 10%.
Barkley pays interest at the end...
Exercise 14-23 On December 31, 2017, the Shamrock Bank enters into a debt restructuring agreement with...
Exercise 14-23
On December 31, 2017, the Shamrock Bank enters into a debt
restructuring agreement with Barkley Company, which is now
experiencing financial trouble. The bank agrees to restructure a
12%, issued at par, $3,700,000 note receivable by the following
modifications:
1.
Reducing the principal obligation from $3,700,000 to
$2,960,000.
2.
Extending the maturity date from December 31, 2017, to January
1, 2021.
3.
Reducing the interest rate from 12% to 10%.
Barkley pays interest at the end of each...
6. Suppose a debt restructuring in which the sum of the future payments to be made...
6. Suppose a debt restructuring in which the sum of the future payments to be made by the debtor is greater than the amount owed by the debtor on the restructuring date. Please indicate which of the following statements is correct. Assertion 1: Debtor will not recognize profit on restructuring and must recalculate the interest rate of the modified debt. Assertion 2: Regardless of whether the sum of future payments is greater or less than the debt at the date...
Another question: Record the payment of the debt at maturity. Exercise 14-34 Troubled debt restructuring; modification...
Another question: Record the payment of the debt at
maturity.
Exercise 14-34 Troubled debt restructuring; modification of terms (Appendix B] At January 1, 2018, Brainard Industries, Inc., owed Second BancCorp $29 million under a 10% note due December 31, 2020. Interest was paid last on December 31, 2016. Brainard was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to: a. Forgive the interest accrued for the year...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Marigold Company, which...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Marigold Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $2,320,000 note receivable by the following modifications: 1. Reducing the principal obligation from $2,320,000 to $1,856,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Marigold pays interest at the end of each year. On January...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Sweet Company, which...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Sweet Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,310,000 note receivable by the following modifications: 1. 2. Reducing the principal obligation from $3,310,000 to $2,648,000. Extending the maturity date from December 31, 2020, to January 1, 2024. Reducing the interest rate from 12% to 10%. 3. Sweet pays interest at the end of each year. On January...
Exercise 14-23 On December 31, 2017, the Indigo Bank enters into a debt restructuring agreement w...
Exercise 14-23 On December 31, 2017, the Indigo Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,700,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,700,000 to $2,960,000. 2. Extending the maturity date from December 31, 2017, to January 1, 2021. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each...
Help Save & Exit Subm Check my work Exercise 14-35 Troubled debt restructuring: modification of terms; unknown effective rate [Appendix B] At January 1, 2018, NCI Industries, Inc. was indebted to First Federal Bank under a $252,000, 8% unsecured note. The note was signed January 1,2014, and was due December 31, 2019. Annual interest was last paid on December 31, 2016. NCI was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. First Federal...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Marin Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $4,310,000 note receivable by the following modifications: 1. Reducing the principal obligation from $4,310,000 to $3,448,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Marin pays interest at the end of each year. On January...
Exercise 14-23 (Part Level Submission)
On December 31, 2020, Cullumber Bank enters into a debt
restructuring agreement with Barkley Company, which is now
experiencing financial trouble. The bank agrees to restructure a
12%, issued at par, $3,900,000 note receivable by the following
modifications:
1.
Reducing the principal obligation from $3,900,000 to
$3,120,000.
2.
Extending the maturity date from December 31, 2020, to January
1, 2024.
3.
Reducing the interest rate from 12% to 10%.
Barkley pays interest at the end...
Exercise 14-23
On December 31, 2017, the Shamrock Bank enters into a debt
restructuring agreement with Barkley Company, which is now
experiencing financial trouble. The bank agrees to restructure a
12%, issued at par, $3,700,000 note receivable by the following
modifications:
1.
Reducing the principal obligation from $3,700,000 to
$2,960,000.
2.
Extending the maturity date from December 31, 2017, to January
1, 2021.
3.
Reducing the interest rate from 12% to 10%.
Barkley pays interest at the end of each...
Another question: Record the payment of the debt at
maturity.
Exercise 14-34 Troubled debt restructuring; modification of terms (Appendix B] At January 1, 2018, Brainard Industries, Inc., owed Second BancCorp $29 million under a 10% note due December 31, 2020. Interest was paid last on December 31, 2016. Brainard was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to: a. Forgive the interest accrued for the year...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Marigold Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $2,320,000 note receivable by the following modifications: 1. Reducing the principal obligation from $2,320,000 to $1,856,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Marigold pays interest at the end of each year. On January...
On December 31, 2020, American Bank enters into a debt restructuring agreement with Sweet Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,310,000 note receivable by the following modifications: 1. 2. Reducing the principal obligation from $3,310,000 to $2,648,000. Extending the maturity date from December 31, 2020, to January 1, 2024. Reducing the interest rate from 12% to 10%. 3. Sweet pays interest at the end of each year. On January...
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