Unformatted text preview: improvements. The bank has agreed to accept land which has a book value of $1,950,000 and a fair value of $2,400,000 as payment for the note outstanding of $3,000,000. The following are the journal entries for restructuring of long-term debt: |Land |2,400,000 | | |Discount on Notes Payable |600,000 | | | Notes Payable | |3,000,000 | This exchange will leave the company with total long-term liabilities of $758,470. The company is also considering switching its post-employment benefits from a defined benefits plan to a defined contribution plan. In a defined contribution plan, the employer “agrees to contribute to a pension trust a certain sum each period, based on a formula” which, in this instance is 3% of payroll (Kieso, Weygandt & Warfield, 2007, p. 1021). A defined benefits plan “outlines the benefits that employees will receive when they retire” (Kieso, Weygandt, & Warfield, 2007, p. 1022). A. .....
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- Spring '09
- Generally Accepted Accounting Principles, $3,000,000, $2,400,000, $1,950,000, $758,470