Shamrock Corp. owes Pharoah Corp. a $119,700, 10-year, 10% note issued at par plus $11,970 of accrued interest. The note is due today, December 31, 2020. Because Shamrock Corp. is in financial trouble, Pharoah Corp. agrees to forgive the accrued interest and $10,840 of the principal, and to extend the maturity date to December 31, 2023. Interest at 10% of the revised principal will continue to be due on December 31 of each year. Assume the market rate of interest is 10% at the date of refinancing. Shamrock and Pharoah prepare financial statements in accordance with IFRS. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.

Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, determine if this is a settlement or a modification. (Hint: Refer to Chapter 3 for tips on calculating.)

Choose the answer from the menu in accordance to the question statement SettlementModification

Prepare a schedule of the debt reduction and interest expense for the years 2020 through 2023. (Do not leave any answer field blank. Enter 0 for amounts.)

Shamrock Corp. SCHEDULE OF DEBT REDUCTION AND INTEREST EXPENSE AMORTIZATION
Date		Cash Interest		Effective Interest (Market)		Change in Carrying Amount		Carrying Amount
12/31/20								$
12/31/21		$		$		$
12/31/22
12/31/23
12/31/23

Calculate the gain or loss for Pharoah Corp. and prepare a schedule of the receivable reduction and interest income for the years 2020 through 2023. (Round answers to 0 decimal places, e.g. 5,275. Do not leave any answer field blank. Enter 0 for amounts.)

GainLoss on restructure $

Pharoah Corp.
Date		Cash Interest		Effective Interest (Market)		Change in Carrying Amount		Carrying Amount of Note
12/31/20								$
12/31/21		$		$		$
12/31/22
12/31/23
12/31/23

Prepare all the necessary journal entries on the books of Shamrock Corp. for the years 2020, 2021, and 2022. (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.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020
Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022
Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022

Prepare all the necessary journal entries on the books of Pharoah Corp. for the years 2020, 2021, and 2022. Assume that Pharoah had not previously recognized any impairment. (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.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022
Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022
Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022