Class_6_Solns

Class_6_Solns - EXERCISE 14-20(a Transfer of property on...

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EXERCISE 14-20 (a) Transfer of property on December 31, 2007: Larisa Nieland Company (Debtor) : Note Payable. ...................................... 200,000 Interest Payable. ................................. 18,000 Accum. Depreciation—Machine. ...... 221,000 Machine. ...................................... 390,000 Gain on Disposal of Machine. ... 21,000 a Gain on Debt Restructuring. ..... 28,000 b a $190,000 – ($390,000 – $221,000) = $21,000. b ($200,000 + $18,000) – $190,000 = $28,000. First State Bank (Creditor) : Machine. .............................................. 190,000 Allowance for Doubtful Accounts. ... 28,000 Note Receivable. ........................ 200,000 Interest Receivable. ................... 18,000 (b) “Gain on Machine Disposition” and the “Gain on Debt Restructuring” should be reported as an ordinary gain in the income statement in accordance with APB Opinion No. 30 and SFAS No. 145. 1
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*EXERCISE 14-20 (Continued) (c) Granting of equity interest on December 31, 2007: Larisa Nieland Company (Debtor) : Note Payable. ...................................... 200,000
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This note was uploaded on 10/14/2009 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue.

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Class_6_Solns - EXERCISE 14-20(a Transfer of property on...

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