By December 31, 2020, Monty Corp. had performed a significant amount of environmental consulting services for Sandhill Ltd. Sandhill was short of cash, and Monty agreed to accept a $195,800, noninterest-bearing note due December 31, 2022, as payment in full. Sandhill is a bit of a credit risk and typically borrows funds at a rate of 12%. Monty is much more creditworthy and has various lines of credit at 8%. Monty 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 Monty Corp.
Assuming Montys fiscal year end is December 31, prepare the journal entry required at December 31, 2021.
Assuming Montys fiscal year end is December 31, prepare the journal entry required at December 31, 2022.
(To record interest income)
(To record maturity)
What are the amount and classification of the note on Monty Corp.s statement of financial position as at Dec. 31, 2021?
The balance of the note at December 31, 2021				$
The note would be classified as a					on the balance sheet.
Assume instead that Monty 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?
Interest income for 2021			$
Interest income for 2022			$