Question
By December 31, 2020, Bridgeport Corp. had performed a significant amount of environmental consulting services for Ivanhoe Ltd. Ivanhoe was short of cash, and Bridgeport
By December 31, 2020, Bridgeport Corp. had performed a significant amount of environmental consulting services for Ivanhoe Ltd. Ivanhoe was short of cash, and Bridgeport agreed to accept a $235,000, non-interest-bearing note due December 31, 2022, as payment in full. Ivanhoe is a bit of a credit risk and typically borrows funds at a rate of 12%. Bridgeport is much more creditworthy and has various lines of credit at 8%. Bridgeport Corp. reports under IFRS. The tables in this problem are to be used as a reference for this problem.
- Prepare the journal entry to record the transaction on December 31, 2020, for Bridgeport Corp.
- Assuming Bridgeport's fiscal year end is December 31, prepare the journal entry required at December 31, 2021.
- Assuming Bridgeport's fiscal year end is December 31, prepare the journal entry required at December 31, 2022.
d)
e) Assume instead that Bridgeport reports under ASPE and uses the straight-line method to amortize the discount on the note. What would the interest income be relating to the note for 2021 and 2022? (Round answer to 0 decimal places, e.g. 58,971.)
Interest income for 2021 $enter a dollar amount rounded to 0 decimal places Interest income for 2022 Senter a dollar amount rounded to 0 decimal places
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