Beautiful, Inc. Balance Sheet December 31, 2021 5 425,621 $ 1,654,887 Cash Accounts Receivable Not long term so no adjustment Note Receivable $ 900,000 Building (net) Construction Equipment (net) Idle Equipment (net) Broadcast License (net) $ $ $ $ 1,800,000 600,000 637,000 107,000 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 2021 No change in use Used equipment dealer quoted $82,000 - original cost $450,000 - change in use so consider impairment 10 year remaining life but changes to the broadcast spectrumso 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) 1,423,000 Total Assets $ 7,547,500 Accounts Payable Line of credit for construction Note Payable 5 $ $ 1,067,450 300,000 651,185 Interest rate is 7 frate 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 5 4,000,000 Retained Earnings 1,528,873 7.547,500 The current interest rate for Beautiful is 7% Required 1. Show all journal entries needed to adjust to fall 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 510,000 to the equipment dealer. So you gave up the old equipment and cash for new equipment on March 1, 202 Beautiful, Inc. Balance Sheet December 31, 2021 5 425,621 $ 1,654,887 Cash Accounts Receivable Not long term so no adjustment Note Receivable $ 900,000 Building (net) Construction Equipment (net) Idle Equipment (net) Broadcast License (net) $ $ $ $ 1,800,000 600,000 637,000 107,000 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 2021 No change in use Used equipment dealer quoted $82,000 - original cost $450,000 - change in use so consider impairment 10 year remaining life but changes to the broadcast spectrumso 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) 1,423,000 Total Assets $ 7,547,500 Accounts Payable Line of credit for construction Note Payable 5 $ $ 1,067,450 300,000 651,185 Interest rate is 7 frate 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 5 4,000,000 Retained Earnings 1,528,873 7.547,500 The current interest rate for Beautiful is 7% Required 1. Show all journal entries needed to adjust to fall 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 510,000 to the equipment dealer. So you gave up the old equipment and cash for new equipment on March 1, 202
