User Account

All Pages

How should strickland report the gain or loss

Assignment Help Accounting Basics
Reference no: EM131106229

1. (Settlement of Debt) Strickland Company owes $200,000 plus $18,000 of accrued interest to Moran State Bank. The debt is a 10-year, 10% note. During 2010, Strickland's business deteriorated due to a faltering regional economy. On December 31, 2010, Moran State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $390,000, accumulated depreciation of $221,000, and a fair market value of $180,000.

(a) Prepare journal entries for Strickland Company and Moran State Bank to record this debt settlement.

(b) How should Strickland report the gain or loss on the disposition of machine and on restructuring of debt in its 2010 income statement?

(c) Assume that, instead of transferring the machine, Strickland decides to grant 15,000 shares of its common stock ($10 par) which has a fair value of $180,000 in full settlement of the loan obligation. If Moran State Bank treats Strickland's stock as a trading investment, prepare the entries to record the transaction for both parties. 

Reference no: EM131106229

Questions Cloud

Define cash conversion cycle : Define cash conversion cycle (CCC). Explain why, holding other things constant, a firm's profitability would increase if it lowered its CCC.
What are some pros and cons of holding high levels : What are some pros and cons of holding high levels of current assets in relation to sales? Use the DuPont equation to help explain your answer.
What interest rate should american bank use to calculate : What interest rate should American Bank use to calculate the loss on the debt restructuring?
Prepare the interest payment entry for barkley company : Reducing the interest rate from 12% to 10%.Barkley pays interest at the end of each year. On January 1, 2014, Barkley Company pays $2,400,000 in cash to Firstar Bank.
How should strickland report the gain or loss : How should Strickland report the gain or loss on the disposition of machine and on restructuring of debt in its 2010 income statement?
What is the annual interest expense : Construct an amortization schedule for a $1,000, 10% annual interest loan with 3 equal installments. What is the annual interest expense for the borrower and the annual interest income for the lender during Year 2?
What is the pv? : What is the PV?
What is the ear corresponding to a nominal rate : What is the EAR corresponding to a nominal rate of 10% compounded semiannually? Compounded quarterly? Compounded daily?
Prepare the journal entry to record the initial transaction : Prepare the journal entry to record the initial transaction on January 1, 2010. (Round all computations to the nearest dollar)

Reviews

Write a Review

Accounting Basics Questions & Answers

  Main sections of the report

1. What are three main sections of the report? 2. Review the introductory section of the CAFR.

  Briefly describe jit inventory management describe one 1

1. briefly describe jit inventory management.2. describe one 1 type of cost that is minimized with jit control.3. in

  Secondary data in gaining customer insights

Explain the role of secondary data in gaining customer insights. Where domarketers obtain secondary data and what are the potential problems in usingit?

  Firm for a domestic project of risk

The spot exchange rate is $1.50 = €1.00. The cost of capital to the Irish firm for a domestic project of this risk is 8%. The U.S. risk-free rate is 3%; the Irish risk-free rate is 2%. What is CF0 in dollars?

  The brisbane manufacturing company produces a single model

the brisbane manufacturing company produces a single model of a cd player. each player is sold for 210 with a resulting

  Assignment you are an entrepreneur

Assignment You are an Entrepreneur

  April and may formed a partnership on january 1 2011 april

april and may formed a partnership on january 1 2011. april contributed 180000 cash and equipment with a market value

  Lavage rapide is a canadian company that owns and operates

lavage rapide is a canadian company that owns and operates a large automatic carwash facility near montreal. the

  74000 in goods sold by mohling with terms fob destination

at december 31 2014 mohling companys inventory records indicated a balance of 602000. upon further investigation it was

  Rachel ray recently opened her own basket weaving studio

rachel ray recently opened her own basket weaving studio. she sells finished baskets in addition to the raw materials

  In october 2011 the company sold a 6-month service contract

drake appliance company an accrual basis taxpayer sells home appliances and service contracts. determine the effects of

  Imas overarching ethical principles include honesty

imas overarching ethical principles include honesty fairnessobjectivity and responsibility. what are the ethical

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd