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jolli1 [7]
3 years ago
6

Fallen Company commonly issues long-term notes payble to its various lenders. Fallen has had a pretty good credit rating such th

at its effective borrowing rate is quite low (less than 8% on an annual basis). Fallen has elected to use the fair value option for the long-term notes issued to Barclay's Bank and has the following data related to the carrying and fair value for these notes. Carrying Value Fair ValueDecember 31,2014 54,000 54,000December 31,2015 44,000 42,500December 31,2016 36,000 38,000a. Prepare the journal entry at December 31 (Fallen's year end) for 2014, 2015, and 2016 to record the fair value option for these notes.b. At what amount will the note be reported on Fallen's 2015 balance sheet?c. What is the effect of recording the fair value option on these notes on Fallen's 2016 income?d. Assuming that general market interest rates have been stable ove the period, does the fair value data for the notes indicate that Fallen's credit-worthiness has improved or declined in 2016? Explain.
Business
1 answer:
dexar [7]3 years ago
5 0

Answer:

b) $42,500

c) Fallen's 2016 net income will get reduced by $3,500  

Explanation:

The a, b, c, d is explained very well in the file attached i hope it works. Thank you.

Download docx
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Answer: P =$50

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An example of a price floor for services can be seen in the minimum wage stated by the government this is to ensure that people's services are not misused anyhow.

Price flooring most times can lead to surplus quantity produced if consumers are not willing to pay the price, because the producer will be wiling to produce more in order to make more profit.

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