Exercise 14-29 and 30

Exercise 14-29 and 30 - Exercise1429 Analysis:...

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Exercise 14-29 Analysis: Carrying amount : $12 million + $1.2 million = $13,200,000 Future payments : ($1 million x 2) + $11 million =13,000,000 Gain to debtor $ 200,000 Gain is recognized by borrower because UNDISCOUNTED future cash flows are less than the carrying value. 1. January 1, 2009 Accrued interest payable (10% x $12,000,000). ........... 1,200,000 Note payable ($13 million – 12 million) * .................. 1,000,000 Gain on troubled debt restructuring. ..................... 200,000 * Establishes a balance in Note payable account equal to the total cash payments under the new agreement. No interest expense will be recorded after the restructuring. All subsequent cash payments reduce the $13,000,000 Note payable balance. 2. December 31, 2010 Note payable. ............................................................ 1,000,000 Cash (revised “interest” amount). ...............................
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Exercise 14-29 and 30 - Exercise1429 Analysis:...

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