I mostly just need help with Question #5.

4. (9 points) Effect of Valuation Method for Nonmonetary Asset on Balance Sheet and Income Statement. Assume Target acquires a tract of land on January 1, 2020, for $109,000 cash. On December 31, 2020, the current market value of the land is $142,000. On December 31, 2021, the current market value of the land is $130,000. The firm sells the land on December 31, 2022, for $189,000 cash. Ignoring income taxes, complete the following items.

(a) Assuming valuation of the land at acquisition cost until sale of the land (Approach 1), indicate the dollar effect of the information on net income for:

1. 2020

2. 2021, and

3. 2022.

(b) Assuming valuation of the land at current market value and including market value changes each year in net income (Approach 2), indicate the dollar effect of the information on net income for:

1. 2020

2. 2021, and

3. 2022.

(c) Assuming valuation of the land at current market value but including unrealized gains and losses in accumulated other comprehensive income until sale of the land (Approach 3), indicate the dollar effect of the information on net income for:

1. 2020

2. 2021, and

3. 2022.

5. (9 points) Effect of Valuation Method for Monetary Asset on Balance Sheet and Income Statement. Refer to the previous problem. Assume that Target has accounted for the value of the land at acquisition cost and sells the land on December 31, 2022, for a two-year note receivable with a present value of $189,000 instead of for cash. The note bears interest at 8% and requires cash payments of $105,985 on December 31, 2023 and 2024. Interest rates for notes of this risk level increase to 10% on December 31, 2023, resulting in a market value for the note on this date of $96,350. Ignoring income taxes, complete the following items.

(a) Assuming valuation of the note at the present value of future cash flows using the historical market interest rate of 8% (Approach 1), indicate the dollar effect of the information on net income for:

1. 2023, and

2. 2024.

(b) Assuming valuation of the note at the present value of future cash flows, adjusting the note to fair value upon changes in market interest rates and including unrealized gains and losses in net income (Approach 2) ), indicate the dollar effect of the information on net income for:

1. 2023, and

2. 2024.