Practice Exercises - Note Payable
Practice Exercises - Note Payable
21. B. 10,000 The note payable is at face amount and is used in usual trade terms
22. Note payable 1,000,000
Accrued interest payable 120,000
Total carrying amount of liability 1,120,000
Cost of land (950,000)
Gain on extinguishment B. 170,000
135,000 QUESTION 2
30,000 Carrying amount of bonds payable 5,000,000
A. 165,000 Fair value of shares issued 4,800,000
Gain on extinguishment of debt B. 200,000
50,000
90,000 24. QUESTION 1
64,000 PV of principal (3,800,000 x .926) 3,518,800
204,000 PV of interest payments (342,000 x .926) 316,692
(150,000) PV of new liability 3,835,492
A. 54,000
Note payable 4,000,000
Accrued interest payable 342,000
Carrying amount 4,320,000
PV of new liability 3,835,492
Gain before income tax C. 484,508
QUESTION 2
Gain before income tax 484,508
Transaction cost 30,000
Gain on restructuring C. 454,508