Fallen Company commonly issues long term notes payable

to its va
Fallen Company commonly issues long-term notes payable to its various lenders. Fallen has
had a pretty good credit rating such that 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.Instructions(a) Prepare the journal entry at December 31 (Fallen’s year-end) for
2012, 2013, and 2014, to record the fair value option for these notes.(b) At what amount will the
note be reported on Fallen’s 2013 balance sheet?(c) What is the effect of recording the fair
value option on these notes on Fallen’s 2014 income?(d) Assuming that general market
interest rates have been stable over the period, does the fair value data for the notes indicate
that Fallen’s creditworthiness has improved or declined in 2014? Explain.
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Fallen Company commonly issues long term notes payable to its va
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