Gia02 tb chapter 14 - Intermediate Accounting 2E - Gordon - TB PDF

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Intermediate Accounting, 2e (Gordon/Raedy/Sannella)Chapter 14 Financing Liabilities14 Notes Payable1) Notes payable are formal credit arrangements that require the payment of a specified face amount of principal at a fixed maturity date. Answer: TRUE Diff: 1 Var: 1 Objective: 14. IFRS/GAAP: GAAP/IFR...

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Intermediate Accounting, 2e (Gordon/Raedy/Sannella) Chapter 14 Financing Liabilities 14.1 Notes Payable 1 )No t espa yabl ea r ef or ma lc r edi ta r r a nge me nt st ha tr e qui r et hepa yme ntofas pe c i fie df a c eamountof pr i nc i pa la tafix edma t ur i t yda t e . Ans we r :TRUE Di ff: 1 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

2 )S hor t t e r m not espa yabl ear er e por t e dont heba l anc es hee ta sc ur r e ntl i abi l i t i e swhe nt he ya r edueand pa yabl ewi t hi noneye arf r om t hebal anc es he etda t eoroper at i ngc yc l e , whi c he veri sl onge r . Ans we r :TRUE Di ff: 1 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

3 )S hor t t e r m de btt ypi c a l l yc ar r i e sahi ghe ri nt er e s tr a t et hanl ongt e r m not e s . Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

4 )Ac ompanyr e c or dsi nt er e s te xpe ns eb yde bi t i ngt hee xpens eac c ounta ndc r edi t i ngnot e spa yabl e . Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

5 )Pr oc ee dsont hei s s uanc eandr e pa yme ntoft hepr i nc i palons hor t t e r m not espa ya bl ear egene r a l l y r epor t e dasfina nc i nga c t i vi t i e sont hes t at e me ntofc as hflows . Ans we r :TRUE Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

6 )I nt e r es tpa yme nt sar ec l a s s i fie dasc as hflowsf r om fina nc i nga c t i vi t i e sont hes t a t e me ntofc a s hflows . Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

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7 )Whi l et hepa yme ntonani ns t al l mentl oani st hes amee ac hper i od,t heamountappl i e dt opr i nc i pa l de c r ea s ese a c hpe r i od. Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

8 )Azer oi nt er e s t be ar i ngnot epa yabl et hati si s s ueda tadi s c ountwi l lnotr e s ul ti na nyi nt e r es te xpens e be i ngr e c ogni ze d. Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

9 )I fal ongt er m not edoe snotha veas t a t e dr a t eofi nt e r e s t , t henot ei sdi s c ount e da tt hema r ketr a t eof i nt e r e s t . Ans we r :TRUE Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

1 0)Har r i s onCor por a t i onbor r owe d$ 36 , 0 00f r om F&M Ba nkonJ une1oft hec ur r e ntye a r .Theba nk r equi r e d8% i nt er e s t .I nt er e s twi l lbepai dwhent heni nemont hnot ebe c ome sdue . Wha ti st hei nt er es t e xpe ns ef ort hec ur r e nty ear ?( Donotr oundi nt e r medi a t ec al c ul at i ons . Onl yr oundyourfinala ns wert o t hene ar e s tdol l ar . ) A)$ 0 B)$2 880 C)$ 168 0 D)$14 40 Ans we r :C Expl ana t i on:$ 36, 00 0pr i nc i pal×8 %i nt er e s t×7 /12=$1 68 0 Di ff: 2 Var : 1 Pa geRe f : 77 3 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

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1 1)Har r i s onCor por a t i onbor r owe d$ 31 , 0 00f r om F&M Ba nkonJ une1oft hec ur r e ntye a r .Theba nk r equi r e d9% i nt er e s t .I nt er e s twi l lbepai dwhent heni nemont hnot ebe c ome sdue . Wha ti st hei nt er es t e xpe ns ef ort hes ubs equentye ari nwhi c ht henot ei sdueandpai d?( Donotr oundi nt e r me di a t e c al c ul at i ons .Onl yr oundyourfinala ns wert ot hene ar e s tdol l a r . ) A)$ 465 B)$2 , 0 93 C)$ 1, 628 D)$1, 39 5 Ans we r :A Expl ana t i on:$ 31, 00 0pr i nc i pal×9 %i nt er e s t×2 /12=$4 65 Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

1 2)Har r i s onCor por a t i onbor r owe d$ 30 , 0 00f r om F&M Ba nkonJ une1oft hec ur r e ntye a r .Theba nk r equi r e d9% i nt er e s t .I nt er e s twi l lbepai dwhent heni nemont hnot ebe c ome sdue . Wha ti st heamount t ha twi l lbepai duponma t ur i t yoft henot e ?( Donotr oundi nt e r me di a t ec al c ul a t i ons . Onl yr oundyour finala ns we rt ot hene a r e s tdol l ar . ) A)$ 30, 45 0 B)$3 2, 70 0 C)$ 30, 00 0 D)$32 , 0 25 Ans we r :D Expl ana t i on:$ 30, 00 0pr i nc i pal+$ 2, 02 5i nt e r es t( $ 30, 0 00×9% i nt e r es t×9/12 )=$3 2, 02 5 Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

1 3)J a c obs e n,I nc .bor r owe d$7 00 , 0 00f r om F&M Ba nkonJ une15oft hec ur r e ntye a r .Theba nkr e qui r ed 6 %i nt e r e s t .I nt er es twi l lbepai dwhe nt he12 mont hnot ebe c ome sdue .Wha tamounts houl dbea c c r ue d a sI nt e r es tPa yabl ef ort heDe c e mbe r3 1ye ar endoft hec ur r entye a r ?( Donotr oundi nt e r me di at e c al c ul at i ons .Onl yr oundyourfinala ns wert ot hene ar e s tdol l a r . ) A)$ 19, 25 0 B)$2 1, 00 0 C)$ 22, 75 0 D)$42 , 0 00 Ans we r :C Expl ana t i on:$ 700 , 0 00pr i nc i pa l×6% i nt er es t×6. 5/1 2=$22 , 7 50 Di ff: 2 Var : 1 Pa geRe f : 77 3 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

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1 4)Mor r i s onCor por a t i onbor r owed$4 9, 000f r om Commer c i alBankonJ une1oft hec ur r e ntye ar . The ba nkr e qui r ed8% i nt er e s t . I nt er e s twi l lbepa i de ve r yt hr eemont hsunt i lt he9mont hnot ei spa i d. Wha ti s t het ot a lI nt er e s tExpe ns eandt heI nt er e s tPa ya bl ea tDec e mbe r31oft hec ur r e ntye ar ?( Donotr ound i nt e r me di a t ec al c ul a t i ons .Onl yr oundy ourfina lans we rt ot hene a r e s tc e nt . ) A)I nt er e s tExpens e$2 286 . 6 7; I nt e r es tPa ya bl e$ 2286. 67 B)I nt er e s tExpens e$3 26. 67 ;I nt er es tPa ya bl e$3 26 . 6 7 C)I nt e r es tExpe ns e$2 28 6. 67; I nt e r e s tPa yabl e$3 26. 67 D)I nt e r e s tExpens e$3 920 . 0 0; I nt e r es tPa yabl e$22 86 . 6 7 Ans we r :C Expl ana t i on:I nt e r e s tExpe ns e: $4 9, 000pr i nc i pal×8% i nt e r e s t×7/12=$2 28 6. 67; I nt er e s tPa ya bl e( i nt er es t pa ymentda t e sar ee ver yt hr eemont hs— s oAugus t3 1andNo ve mbe r3 0; i nt e r e s tpa ya bl er e pr e s e nt s Dec e mbe rac c r ual )$ 49 , 0 00pr i nc i pa l×8% i nt er e s t×1 /1 2=$ 32 6. 67 Di ff: 2 Var : 1 Pa geRe f : 77 3 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Ana l yt i c alt hi nki ng

1 5)TheHuds onCompanybor r owe d$ 250 , 0 00t opur c ha s emac hi ne r yanda gr ee dt opa y4% i nt er e s tf or s i xyear sonani ns t al l me ntnot e .Eac hnot epa yme nti s$ 47, 69 0.How muc hi nt e r es ti sHuds onpa yi ngove r t hel i f eoft hel oa n?( Donotr oundi nt er me di a t ec al c ul a t i ons . Onl yr oundyourfinala ns we rt ot hene a r e s t dol l ar . ) A)$ 50, 00 0 B)$3 6, 14 0 C)$ 23, 84 5 D)$60 , 0 00 Ans we r :B Expl ana t i on:I nt e r e s ti st hedi ffe r enc ebe t wee nt het ot a lpa yme nt sandt heamountbor r owe d,$4 7, 69 0×6 =$2 86, 1 40-$25 0, 00 0=$ 36, 14 0. Di ff: 2 Var : 1 Pa geRe f : 77 5 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Ana l yt i c alt hi nki ng

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1 6)OnJ a nuar y1 ,t heHuds onCompanybor r owe d$ 16 0, 000t opur c ha s emac hi ne r yanda gr e edt opa y4% i nt e r e s tf ors i xye ar sonani ns t al l mentnot e .Ea c hnot epa yme nti s$ 30 , 5 22a ndi sdueont hel a s tda yoft he ye ar .How muc hi nt e r e s twi l lHuds onr e por tf ort hefir s tye aroft hel oa n?( Donotr oundi nt er me di a t e c al c ul at i ons .Onl yr oundyourfinala ns wert ot hene ar e s tdol l a r . ) A)$ 30, 52 2 B)$6 , 4 00 C)$ 24, 12 2 D)$1, 22 1 Ans we r :B Expl ana t i on: Se et heamor t i za t i ont abl ebe l ow.I nt e r e s ti s4 % oft hec ar r yi ngv al ue . I nt e r e s t Pr i nc i pa l Da t e T ot a lPa yme nt Pa yme nt Pa yme nt Ca r r yi ngVa l ue J an1 $ 160 , 000 Dec3 1 $30 , 5 22 $ 6, 40 0 $ 24, 12 2 $1 35, 8 78 Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Ana l yt i c alt hi nki ng

1 7)OnJ a nuar y1 ,t heHuds onCompanybor r owe d$ 19 0, 000t opur c ha s emac hi ne r yanda gr e edt opa y8% i nt e r e s tf ors i xye ar sonani ns t al l mentnot e .Ea c hnot epa yme nti s$ 41 , 1 00a ndi sdueont hel a s tda yoft he ye ar . Whati st hec ar r yi ngval ueoft hel oa na tt heendoft hefir s tye ar ?( Donotr oundi nt er me di a t e c al c ul at i ons .Onl yr oundyourfinala ns wert ot hene ar e s tdol l a r . ) A)$ 148 , 9 00 B)$1 90, 0 00 C)$ 164 , 1 00 D)$20 5, 20 0 Ans we r :C Expl ana t i on: Se et heamor t i za t i ont abl ebe l ow. I nt e r e s t Pr i nc i pa l Da t e T ot a lPa yme nt Pa yme nt Pa yme nt Ca r r yi ngVa l ue J an1 $ 190 , 000 Dec3 1 $41 , 1 00 $1 5, 20 0 $ 25, 90 0 $1 64, 1 00 Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Ana l yt i c alt hi nki ng

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1 8)Hor ne tMot or spur c has edac us t omma demet alpr e s sf orus ei nr e pai r i ngwr e c kedc ar s .Thepr e s s wasi ns t al l e donJ a nuar y2, 201 8.Thepr e s shadnoknownmar ke tva l ue . Hor ne ta gr e e dt opa y$2 80 , 0 00on Dec e mbe r31, 20 20andas kedf ora5 %i nt e r e s tr a t e . Att het i me , Hor ne t ' si nc r eme nt albor r owi ngr a t ewas 7 %. Thes e l l e ragr ee dt ot het e r msandr eques t e di nt e r es tpa yme nt sonDe c e mbe r3 1eac hye ar . Wha ti st he s e l l i ngpr i c eoft hemac hi negi ve nt het e r msa ndr at e spr ovi ded?( Donotr oundanyi nt e r me di a t e c al c ul at i ons .Roundyourfina lans wert ot hene ar e s tdol l a r . ) A)$ 316 , 7 40 B)$2 65, 3 04 C)$ 280 , 0 00 D)$27 0, 56 3 Ans we r :B Expl ana t i on:Thes e l l i ngpr i c eoft hemac hi nei st hepr e s entva l ueoft hea nnuali nt e r es tpa yme nt sand pr i nc i palbal anc ea tt heendoft hel oan, di s c ount e da tt hei nc r e me nt alr a t eof7%.N =3 ,I /Y=7%,FV= $ 28 0, 000 ,PMT=$ 14, 0 00, s ol vef orPV=$ 265 , 3 04 .Us i ngEx c e l , t hepr e s e ntva l ueoft henot ei s =PV( 0. 07 , 3 , 1 4, 00 0, 280 , 000 ) Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Ana l yt i c alt hi nki ng

1 9)Hor ne tMot or spur c has edac us t omma demet alpr e s sf orus ei nr e pai r i ngwr e c kedc ar s .Thepr e s s wasi ns t al l e donJ a nuar y2, 201 8.Thepr e s shadnoknownmar ke tva l ue . Hor ne ta gr e e dt opa y$2 60 , 0 00on Dec e mbe r31, 20 20andas kedf ora2 %i nt e r e s tr a t e . Att het i me , Hor ne t ' si nc r eme nt albor r owi ngr a t ewas 1 0%.Thes e l l eragr ee dt ot het e r msandr e que s t e di nt er e s tpa yme nt sonDec e mbe r31ea c hye a r .Wha ti s t hea mountofc as hi nt e r e s tpai da tt hee ndof2 018 ? A)$ 0 B)$2 6, 00 0 C)$ 5, 200 D)$20 , 8 00 Ans we r :C Expl ana t i on:Ca s hi nt e r e s ti sbas edont hes t at e dr a t eof2,2 % ×$ 260 , 000pr i nc i pal=$5 , 2 00 . Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Ana l yt i c alt hi nki ng

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2 0)Hor ne tMot or spur c has edac us t omma demet alpr e s sf orus ei nr e pai r i ngwr e c kedc ar s .Thepr e s s wasi ns t al l e donJ a nuar y2, 201 8.Thepr e s shadnoknownmar ke tva l ue . Hor ne ta gr e e dt opa y$3 00 , 0 00on Dec e mbe r31, 20 20andas kedf ora2 %i nt e r e s tr a t e . Att het i me , Hor ne t ' si nc r eme nt albor r owi ngr a t ewas 7 %. Thes e l l e ragr ee dt ot het e r msandr eques t e di nt e r es tpa yme nt sonDe c e mbe r3 1eac hye ar . Wha ti st he c ar r yi ngval ueoft henot ea tt hee ndof20 18?( Roundanyi nt e r me di a r yc al c ul a t i onsandyourfina lans we r t ot hene ar e s tdol l ar . ) A)$ 272 , 8 79 B)$2 60, 6 35 C)$ 285 , 9 81 D)$30 0, 00 0 Ans we r :A Expl ana t i on:Us i ngExc e l , t hepr es e ntval ueoft henot ei s$ 26 0, 635 .TheEx c elf unc t i oni s=PV( 0. 07 , 3 , , 30 0, 00 0) Amor t i za t i onTabl e Da t e Cas hI nt e r e s t Effec t i veI nt . Amor t i za t i on Ca r r yi ngVal ue J anuar y2 ,2 018 2 60, 63 5 Dec e mbe r31, 20 18 6 , 0 00 1 8, 24 4 12, 2 44 2 72 , 8 79 Dec e mbe r31, 20 19 6 , 0 00 1 9, 10 2 13, 1 02 2 85 , 9 81 Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Ana l yt i c alt hi nki ng

2 1)Hor ne tMot or spur c has edac us t omma demet alpr e s sf orus ei nr e pai r i ngwr e c kedc ar s .Thepr e s s wasi ns t al l e donJ a nuar y2, 201 8.Thepr e s shadnoknownmar ke tva l ue . Hor ne ta gr e e dt opa y$3 00 , 0 00on Dec e mbe r31, 20 20andas kedf ora6 %i nt e r e s tr a t e . Att het i me , Hor ne t ' si nc r eme nt albor r owi ngr a t ewas 1 0%.Thes e l l eragr ee dt ot het e r msandr e que s t e di nt er e s tpa yme nt sonDec e mbe r31ea c hye a r .Wha ti s t hec ar r yi ngval ueoft henot ea tt hee ndoft hes ec ondye ar ?( Roundanyi nt e r me di ar yc al c ul a t i onsand y ourfina lans we rt ot hene ar e s tdol l ar . ) A)$ 279 , 1 74 B)$2 70, 1 58 C)$ 289 , 0 91 D)$30 0, 00 0 Ans we r :C Expl ana t i on:Us i ngExc e l , t hepr es e ntval ueoft henot ei s$ 27 0, 158 .TheEx c elf unc t i oni s=PV( 0 . 1 , 3 , 1 8, 00 0, 300 , 0 00 ) Amor t i za t i onTabl e Da t e Cas hI nt e r e s tEffe c t i veI nt . Amor t i za t i on Ca r r yi ngVal ue J anuar y2 ,2 018 2 70, 15 8 Dec e mbe r31, 20 18 18 , 0 00 2 7, 01 6 9, 0 16 2 79 , 1 74 Dec e mbe r31, 20 19 18 , 0 00 2 7, 91 7 9, 9 17 2 89 , 0 91 Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Ana l yt i c alt hi nki ng

2 2)Hor ne tMot or spur c has edac us t omma demet alpr e s sf orus ei nr e pai r i ngwr e c kedc ar s .Thepr e s s hadnokno wnmar ke tval ue .Hor ne ta gr e edt opa y$ 30 0, 000a tt heendoft hr e eyea r sanda s ke df ora3 % i nt e r e s tr at e .Att het i me , Hor ne t ' si nc r eme nt albor r owi ngr a t ewas7 %.How s houl dt hes e l l e randbuye r r ec or dt het r ans ac t i on? A)Eac hs houl dr e c or dt hes a l e /pur c has ea t$30 0, 00 0. 7 Copyr i ght©20 1 9Pe ar s onEduc a t i on, I nc .

B)Thes e l l ers houl dr e c or dt hes al ea t$3 00, 0 00andHor ne ta tt hepr e s entva l ueof$3 00 , 0 00. C)Eac hs houl dr e c or dt het r ans ac t i ona tt hepr e s entva l ueoft heno t epa ya bl e/r e c e i va bl e . D)Hor ne ts houl dr ec or dt hes al ea t$ 300 , 000a ndt hes e l l era tt hepr e s entva l ueof$3 00, 00 0. Ans we r :C Di ff: 2 Var : 1 Pa geRe f : 77 6 77 7 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

2 3)Ge or gi aI nt er na t i onalbor r owe d$1 , 0 00 , 0 00f ore i ghtmont hsf r om i t sba nkdur i ngt hec ur r e ntyea r . I nt e r e s ti spa yabl ei nf ul lont hedueda t eoft henot e . Requi r ed:Det e r mi net heamountofi nt e r e s te xpens ef ort hec ur r e ntye a rba s edont hef ol l owi ng bor r owi ngda t e s ,fis c a lye arendda t e s ,a ndi nt e r e s tr at e s . Bor r owi ngDa t e J une1 Se pt e mber30 Augus t1 Ma y1

Ye ar EndDa t e Oc t obe r31 De c ember3 1 De c ember31 Augus t31

I nt e r e s tRa t e 1 0% 6% 8% 9 %

I nt e r es tExpe ns e

Ans we r : Bor r owi ngDa t e J une1 Se pt e mbe r30 Augus t1 Ma y1

Ye ar EndDa t e Oc t obe r3 1 Dec ember31 De c ember3 1 Augus t3 1

I nt e r e s tRa t e 1 0% 6% 8 % 9%

I nt e r es tExpe ns e $ 41, 66 7 $1 5, 00 0 $ 33 , 3 33 $3 0, 000

Di ff: 2 Var : 1 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

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2 4)OnNove mbe r1 ,YungCor p. bor r owed$ 50 , 0 00onas i x mont hnot ef r om i t sba nk.I nt e r es ta t8% wi l l bepai dwhe nt henot ei sdue .Re c or danyj our nalent r i e sne c es s a r yt or e c or dt he s et r a ns a c t i ons .Yung' s fis c a lye a ri st hec a l enda ry ear . Ans we r : Ac c ount De bi t Cr e di t No ve mbe r1 Ca s h 5 0, 00 0 S hor t Te r m Not ePa ya bl e 50 , 0 00 Shor t t e r m not eduei n6mont hs . Dec e mbe r3 1 I nt er e s tExpens e I nt er e s tPa ya bl e Ac c r ual2mont hsi nt e r e s t . Ma y1

S hor t t e r m Not ePa yabl e I nt er e s tPa yabl e I nt er e s tExpens e Ca s h Pa yme nti nf ul lofSTNot e

6 67 6 67

50, 00 0 6 67 1, 33 3 5 2, 00 0

Di ff: 2 Var : 1 Pa geRe f : 77 3 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

2 5)OnJ a nuar y2 ,ZhangCompa nybor r owe d$2, 0 00, 00 0ona10 ye a r ,7 %,t er ml oa nf r om i t sbank. Requi r ed:Comput et heannuali nt e r e s te xpe ns ea ndt ot ali nt er e s te xpe ns ef ort hel oan. Ans we r :Annuali nt e r e s te x pens e :$ 2, 000 , 000×. 07=$14 0, 00 0 T ot a li nt er e s tf ort hel oan:$ 2, 000 , 000×. 0 7×1 0ye ar s=$ 1, 40 0, 00 0 Di ff: 1 Var : 1 Pa geRe f : 77 3 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

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2 6)Hor ne tMot or spur c has edac us t omma demet alpr e s sf orus ei nr e pai r i ngwr e c kedc ar s .Thepr e s s wasi ns t al l e donJ a nuar y2, 201 8.Thepr e s shadamar ke tva l ueof$ 300 , 0 00 .Hor ne ta gr ee dt opa yf ort he pr e s si nt hr e ee quali ns t a l l ment sbe gi nni ngDe c e mbe r3 1,2 01 8.Att het i me ,Hor ne t ' si nc r eme nt a l bor r owi ngr at ewas7%. Requi r ed:Comput et hei ns t al l mentpa yme nt sandpr epar et het hr e e ye aramor t i z a t i ont abl ef ort henot e pa yabl e .Pr epar et hej our na le nt r i e st or e c or dt hepur c has eoft hema c hi ne ,t hefir s tannualpa yme nt ,and t hefina lpa yme ntont henot e . Ans we r : =PMT( . 07 , 3 , 3 000 00 )=$1 14, 31 5. 50=$1 14, 31 6 N =3 I /Y=7 % PV=$ 300 , 0 00 FV=0 Sol vef orPMT=$ 114 , 3 15 . 5 0=$ 11 4, 316 Amor t i za t i onTabl e Da t e Cas hPa yme nt Effec t i veI nt . J anuar y1 ,2 018 Dec e mbe r31, 20 18 11 4, 316 21, 00 0 Dec e mbe r31, 20 19 11 4, 316 14, 46 8 Dec e mbe r31, 20 20 11 4, 316 7 , 4 80 * T ot al s 342 , 9 48 4 2, 94 5 * adj us t e df or r oundi nger r or s

Pr i nc i pa l

Ca r r yi ngVal ue 3 00, 00 0 93 , 3 15 206 , 6 85 9 9, 847 10 6, 838 10 6, 838 0 3 00, 00 0

J our na lEnt r i es J an.2 ,2 018

Ac c ount Ma c hi ne r y LongTe r m Not ePa yabl e

De bi t Cr e di t 3 00 , 0 00 300 , 0 00

Dec .31 ,20 18 I nt e r e s tExpens e LongTe r m Not ePa ya bl e Cas h

21 , 0 00 93 , 316

Dec .31 ,20 20 I nt e r e s tExpens e LongTe r m Not ePa ya bl e Cas h

7 , 4 80 106 , 836

114 , 316

114 , 316

Di ff: 3 Var : 1 Pa geRe f : 77 5 Obj e c t i ve :14 . 1 I FRS/GAAP:GAAP/I FRS AACSB:Appl i c a t i onofknowl e dge

1 0 Copyr i ght©20 1 9Pe ar s onEduc a t i on, I nc .

2 7)Hor ne tMot or spur c has edac us t omma demet alpr e s sf orus ei nr e pai r i ngwr e c kedc ar s .Thepr e s s wasi ns t al l e donJ a nuar y2, 201 8.Thepr e s shadnoknownmar ke tva l ue . Hor ne ta gr e e dt opa y$3 00 , 0 00on Dec e mbe r31, 20 20andas kedf ora3 %i nt e r e s tr a t e . Att het i me , Hor ne t ' si nc r eme nt albor r owi ngr a t ewas 7 %. Thes e l l e ragr ee dt ot het e r msandr eques t e di nt e r es tpa yme nt sonDe c e mbe r3 1eac hye ar . Requi r ed: 1 .Comput et hes el l i ngpr i c eoft hemac hi ne . 2 .Pr e par et het hr ee ye aramor t i z a t i ont abl ef ort henot epa ya bl e . 3 .Pr e par et hej our nalent r i e st or e c or dt hepur c has eoft hemac hi ne ,t hefir s tannuali nt er e s tpa yme nt , and t hefina lpa yme ntofi nt er e s ta ndpr i nc i pal . Ans we r :Thes e l l i ngpr i c eoft hemac hi nei st hepr es entva l ueoft hea nnuali nt er e s tpa yme nt sa nd pr i nc i palbal anc ea tt heendoft hel oan, di s c ount e da tt hei nc r e me nt alr a t eof7%.N =3 ,I /Y=7%,FV= $ 30 0, 000 ,PMT=$ 9, 00 0,s ol vef orPV=$2 68, 50 8. TheExc e lf unc t i onus e di s=PV( . 07 , 3 , 9 00 0, 3 000 00 )= 2 68 , 5 08. Da t e J anuar y2 ,2 018 Dec e mbe r31, 20 18 Dec e mbe r31, 20 19 Dec e mbe r31, 20 20 T ot al s<...