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Prepare an entry at december

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Question - On December 31, 2020, Green Bank enters into a debt restructuring agreement with Shamrock Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.4-million, 10% note receivable issued at par by the following modifications:

1. Reducing the principal obligation from $2.4 million to $2.28 million

2. Extending the maturity date from December 31, 2020, to December 31, 2023

3. Reducing the interest rate from 10% to 8%

Shamrock pays interest at the end of each year. On January 1, 2024, Shamrock Inc. pays $2.28 million in cash to Green Bank. Shamrock prepares financial statements in accordance with IFRS 9.

1) Prepare an entry at December 31, 2020, based on the results of your calculation

2) Prepare an effective interest amortization table for the remaining term of the note

3) Prepare the interest payment entry for Shamrock on December 31, 2022, and the entry on January 1, 2024.

4) Assume instead that Shamrock follows ASPE. Using (1) a financial calculator or (2) Excel function Rate, calculate the rate of interest that Shamrock should use to calculate its interest expense in future periods. (Hint: Refer to Chapter 3 for tips on calculating.)

5) Continuing the assumption of following ASPE, prepare an effective interest amortization table for the remaining term of the note

6) Continuing the assumption of following ASPE, prepare the interest payment entry for Shamrock on December 31, 2022, and the entry on January 1, 2024.

Reference no: EM133107361

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