Beautiful, Inc. Balance Sheet December 31, 2021 13 Cash $ 425,621 Accounts Receivable $ 1,654,887 Not long term so no adjustment Note Receivable $ 900,000 Building (net) Construction 1,800,000 600,000 Equipment (net) Idle Equipment (net) 637,000 107,000 Broadcast License (net) 1,423,000 Total Assets $ 7,547,508 Accounts Payable $ 1,067,450 Line of credit for construction $ 300,000 Note Payable $ 651,185 Received on 2/1/2021 In return for a large service contract Terms no interest-3 payments of 300,000 each Feb-need to calculate the present value Being used for normal operations so no adjustment Weighted Average expenditures 375000 to add in capitalized interest-started and completed in 20 No change in use Used equipment dealer quoted $82,000-original cost $450,000-change in use so consider impairme 10 year remaining life but changes to the broadcast spectrum-so need to consider Impairment Company saves on royalties for using the broadcast spectrum on contract Without the broadcast license the royalties would be 126,000 per year (this is the future cash flows) Interest rate is 7% (rate for capitalized interest) Borrowed 800,000 on January 1, 2018 with monthly payments for 15 years at 6% Need to calculate the payment and then the present value of future cash flows using new interest rate Total Liabilities $ 2,018,635 Paid In Capital $ 4,000,000 Retained Earnings $ 1,528,873 $ 7,547,508 The current interest rate for Beautiful is 7%, Required: 1. Show all journal entries needed to adjust to fair value where necessary. 2. Show the new balance sheet with fair value as indicated. 3. Show the journal entry to record the trade in of the idle equipment for new equipment (sticker price $105,000) plus payment of $10,000 to the equipment dealer. So you gave up the old equipment and cash for new equipment on March 1, 202.