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Determine the unrealized holding gain or loss on the note

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Reference no: EM132246566

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Q1. Bonita Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 11% and has a carrying value of $19,000. At year-end, Bonita's borrowing rate (credit risk) has declined; the fair value of the note payable is now $20,800.

Determine the unrealized holding gain or loss on the note.

Prepare the entry to record any unrealized holding gain or loss.

Q2. Sheridan Corporation manufactures replicators. On January 1, 2017, it leased to Althaus Company a replicator that had cost $110,400 to manufacture. The lease agreement covers the 5-year useful life of the replicator and requires 5 equal annual rentals of $38,400 payable each January 1, beginning January 1, 2017. An interest rate of 10% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.

Prepare Sheridan's January 1, 2017, journal entries.

Reference no: EM132246566

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