Question
On December 31, 2016, Green Company finished consultation services and accepted in exchange a promissory note with a face value of $550,000, a due date
On December 31, 2016, Green Company finished consultation services and accepted in exchange a promissory note with a face value of $550,000, a due date of December 31, 2019, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%.
The following interest factors are provided: Interest Rate Table Factors For Three Periods 5% 10%
QS) Prepare a Schedule of Note Discount Amortization for Green Company under the effective interest method.
Future Value of 1 1.15763 // 1.33100
Present Value of 1 0.86384// 0.75132
Future Value of Ordinary Annuity of 1 3.15250 //3.31000
Present Value of Ordinary Annuity of 1 2.72325// 2.48685
Date 12/31/16 12/31/17 12/31/18 12/31/19 Cash Interest (5%) Effective Interest (10%) Discount Amortized Unamortized Discount Balance Present Value of Note 27500 27500 27500 82500Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started