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Fallen Company commonly issues long - term notes payable to its various lenders. Fallen has had a pretty good credit rating such that its effective
Fallen Company commonly issues longterm notes payable to its various lenders. Fallen has had a pretty good credit rating such that its effective borrowing rate is quite low less than on an annual basis Fallen has elected to use the fair value option for the longterm notes issued to Barclays Bank and has the following data related to the carrying and fair value for thesenotes Any changes in fair value are due to changes in market rates, not credit risk.
Carrying Value
Fair Value
December
$
$
December
December
Instructions
Prepare the journal entry at December Fallens yearend for and to record the fair value option for these notes.
At what amount will the note be reported on Fallens balance sheet?
What is the effect of recording the fair value option on these notes on Fallens net income?
Assuming that general market interest rates have been stable over the period, does the fair value data for the notes indicate that Fallens creditworthiness has improved or declined in Explain.
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