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City National Bank signed a loan agreement with State Electric Supply Company on January 2 , The loan had the following terms: In connection with
City National Bank signed a loan agreement with State Electric Supply Company on January
The loan had the following terms:
In connection with this transaction, City National Bank incurred the following costs:
Costs
Fees paid for loan Processing
Employee Bonus
Advertising Costs
Preparation of loan docs.
Amount Paid
$ balance
$ balance
$
$
City National Bank's loan department manager, James Bean, is unsure how they should account
for these costs and their impact on profitability. Should City National Bank Lending expense the
costs associated with the loan, or can they defer them? If the costs are deferred, when should
they be expensed?
Required:
Prepare a letter to Jim explaining the requirements for all the transactions. The body of the
letter should follow the FIRAC format:
Facts
Issues
Research
Analysis
Conclusion
James Bean's address is Third Avenue, Huntington, WV Utilize your May and May
text for guidance on the letter style. Your writing is important here. James is not an accountant.
In addition, your research must include appropriate citations from the FASB Accounting
Standards Codification ASC Failure to provide ASC citations will result in a ZERO for the
assignment. You may only use your textbook for guidance do not cite and the ASC to locate
your answers NO GOOGLE.
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