Question

Current Attempt in Progress Metock Company commonly issues long term es payable to its various lenders. Metlock has had a pretty good credit rating such that its effective borrowing rate it low less than on value option for the long term.notes issued to Barclay's Bank and has the following data related to the carrying and value for these notes Any changes in valoarea to change de ma Metlackas elected to atscredit risk the tar December 31, 2017 December 31, 2018 December 31, 2019 Carrying Value Fair Value 556,000 $56.000 47.600 45.900 33.700 35,700 Prepare the journal entry at December 31 (Metlock's year-end for 2017, 2018 and 2019 to record the fair value option for these are automatically indented when mount e d Do not indien mond ter tryg d select 'No Entry for the counter ander m e ditatie Date Account Titles and Explanation Dec 31, 2017 Dec 31, 2018 Dec 31, 2019 (b) At what amount will the note be reported on Methods 2018 balance sheet Note to be reported on Metlocks 2018 balance sheets Id what is the effect of record the value option on these notes on Metrock 2019 come! of 5 oct of record the do value otion would resulta

Answer 1

Solutions : Journal Entries Date Account Titles and Explanation Dec-31, No Entry 2017 Debit($) Credit (6) $0 $0 $1,700 Dec-31, Notes payable ($47,600-$45,980). 2018 unrealised Holding Gain / Loss - Net Income $1,700 $3,500 Dec-31, unrealized Holding Geinl Loss - Net Income 2014 Notes payable ($35,100-$33,100 $1,780) $3,700 b) Note to be reported on Meblock's 2018 . balance sheet 3 $ 45,900 : 1o) The effect of recording the fair value option would result in unrealized holding - to res insting - Deezeased by $31700

I Explanation's a on Dec 31, 17 carrying value = Fair value therefore no Journal entry. E b) The note will be accounted for at the reasonable value of notes payable starting on 31 December 2018. Slubsequently, the note will get detained at $45,900 in the Metlock's 2018 asset report. ☺ Metlock's 2019 net gain will get decreased by $3,700 (allude to diary section 3) as any adjustment in reasonable value will be accounted for as in acclimation to the overall gain for the seperate year. 02

Hit the LIKE Button.