Exercise 14-24

On December 31, 2020, Green Bank enters into a debt restructuring agreement with Marin Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.4-million, 11% note receivable issued at par by the following modifications:

1.		Reducing the principal obligation from $2.4 million to $2.28 million
2.		Extending the maturity date from December 31, 2020, to December 31, 2023
3.		Reducing the interest rate from 11% to 9%

Marin pays interest at the end of each year. On January 1, 2024, Marin Inc. pays $2.28 million in cash to Green Bank. Marin prepares financial statements in accordance with IFRS 9.

1.Prepare an entry at December 31, 2020, based on the results of your calculation. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 2.

Prepare an effective interest amortization table for the remaining term of the note. (Round answers to 0 decimal places, e.g. 5,250.)

MARIN INC. INTEREST PAYMENT SCHEDULE AFTER DEBT RESTRUCTURING

Date

Cash Interest

Effective Interest

Increase of Carrying Amount

Carrying Amount of Note

12/31/20

$

12/31/21

$

$

$

12/31/22

12/31/23

Total

$

$

$

3.Prepare the interest payment entry for Marin on December 31, 2022, and the entry on January 1, 2024. (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 4.

Continuing the assumption of following ASPE, prepare an effective interest amortization table for the remaining term of the note. (Round yield values to 4 decimal places, e.g. 52.7525 and final answers to 0 decimal places, e.g. 5,250.)

MARIN INC. INTEREST PAYMENT SCHEDULE AFTER DEBT RESTRUCTURING

Date

Cash Interest

Effective Interest

Reduction of Carrying Amount

Carrying Amount of Note

12/31/20

$

12/31/21

$

$

$

12/31/22

12/31/23

Total

$

$

$

5Continuing the assumption of following ASPE, prepare the interest payment entry for Marin on December 31, 2022, and the entry on January 1, 2024. (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)