On December 31, 2013, Samsung Co. is in financial difficulty and cannot pay a note due that
Question:
On December 31, 2013, Samsung Co. is in financial difficulty and cannot pay a note due that day. It is a $750,000 note with $75,000 accrued interest payable to Bayer, Inc. Bayer agrees to forgive the accrued interest, extend the maturity date to December 31, 2013, and reduce the interest rate to 4%. The present value of the restructured cash flows is $642,000.
Instructions
Prepare entries for the following:
(a) The restructure on Samsung’s books.
(b) The payment of interest on December 31, 2014.
(c) The restructure on Bayer’s books.
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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