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leva [86]
3 years ago
12

During 20X5 Peterson Company experienced financial difficulties and is likely to default on a $500,000, 15%, three-year note dat

ed January 1, 20X4, payable to Forest National Bank. On December 31, 20X5, the bank agreed to settle the note and unpaid interest of $75,000 for 20X5 for $50,000 cash and marketable securities having a current market value of $375,000. Peterson's acquisition cost of the securities is $385,000. Ignoring income taxes, what amount should Peterson report as a gain from the debt restructuring in its 20X5 income statement
Business
1 answer:
Troyanec [42]3 years ago
8 0

Answer:

The amount that Peterson should report as a gain from the debt restructuring in its 20X5 income statement is $150,000.

Explanation:

This can be calculated as follows:

<u>Details                                                                       Amount ($)   </u>

Principal                                                                      500,000

Interest accrued                                                        <u>    75,000  </u>

Net carrying amount                                                  575,000

Settlement price:

Cash                                                                            (50,000)

Current market value of marketable securities   <u>   (375,000)  </u>

Gain from debt restructuring                               <u>    150,000   </u>

Therefore, the amount that Peterson should report as a gain from the debt restructuring in its 20X5 income statement is $150,000.

Note: The gain calculated above is a gain before tax. The applicable tax rate to Peterson Company in its country of operation has to be used by it to determine its gain after tax.

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Under a system of freely floating exchange rates, an increase in the international value of a nation's currency will cause its imports to rise.

<h3>What are floating exchange rates?</h3>
  • A floating exchange rate (also known as a fluctuating or flexible exchange rate) is a type of exchange rate regime in which the value of a currency is permitted to fluctuate in reaction to foreign exchange market occurrences.
  • A floating currency is one that uses a floating exchange rate, as opposed to a fixed currency, the value of which is determined in terms of material items, another currency, or a group of currencies (the idea of the last being to reduce currency fluctuations).
  • When the international value of a country's currency rises, so do its imports, and vice versa.

As it is given in the description itself, when the international value of a country's currency rises, so do its imports, and vice versa.

Therefore, Under a system of freely floating exchange rates, an increase in the international value of a nation's currency will cause its imports to rise.

Know more about floating exchange rates here:

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The question you are looking for is here:

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3 0
2 years ago
The formula for the production budget is budgeted sales in units plus desired ending merchandise inventory less beginning mercha
Deffense [45]

Answer:

desired ending finished goods units less beginning finished goods units.

Explanation:

production budget can be regarded as budget that gives the calculation of the number of units of particular products which is needed to be manufactured, this is comprises the sales forecast as well as amount of finished goods inventory that is planned to have on hand.

It should be noted that the formula for the production budget is desired ending finished goods units less beginning finished goods units..

7 0
3 years ago
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the
Irina-Kira [14]

Answer:

A. Lowest Total Cost:

A. 315,550 or more

B. Lowest total cost of annual volume of 120 boats

C. C

Explanation:

The lowest total cost among the three alternatives is b.

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If the company Subcontracts then Total cost per boat is $2,620

If a company goes for expanding existing facility then it will incur fixed cost of $57,000 and variable cost will be $1,030 per boat.

If company produces 315,000 or more boats then it will have lowest possible cost for the boat.

For an output of 120 bots the best possible alternative is option C. The fixed cost will be $475 per boat ($57,000 / 120 boats)

The total cost will be $1,505 ($475 + $1,030)

5 0
3 years ago
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Answer:

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Answer:

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The other four alternatives aren't connected to the given scenario. So the above is the right option.

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