NAMA : ALISYA UMARI

NIM : 041911333188

TUGAS AKM II PERTEMUAN 9

E 14-20= Entries for Settlement of Debt => LO 3

a.

Notes payable 199,800

Land 90,000

Gain on disposal of land 50,000

Gain on extinguishment of debt 59,800

b.

Present value of restricted cash flow

Present value of $220,000 ( 220,000 x 0.857) 188,540

Present value of $11,000 interest payable 19,613

(11,000 x 1.783)

Fair value of note 208,153

December 31, 2019

Notes payable 270,000

Gain on extinguishment of debt 61,847

Notes payable (new) 208,153

December 31, 2020

Interest expense 16,652

Notes payable 5,652

Cash 11,000
 December 31, 2021

interest expenses 17,104

notes payable 213,896

cash 231,000

E 14-21= Fair Value Option=> LO 4

a.

Dec. 31 2019

No entries

Dec. 31 2020

Notes payable 1,500

Unrealized holding gain or loss 1,500

Dec. 31 2021

Unrealized holding gain or loss 3,500

Notes payable 3,500

b. 42,500

c. Fallen’s 2021 income is 3,500 lower

d. declined, because its debt fair value declined. Since the general market rate have been stable, the fair
value decline must have been caused by a decline in Fallen’s creditworthiness

e. when the value of a liability changes due to a company’s specific credit risk, this change in value is
recorded in other comprehensive income. As a result changes in value do not effect net income of net
loss.
E 14-22= Long-Term Debt Disclosure=> LO 4

2020 $0

2021 $2,500,000

2022 $2,500,000 + 2,000,000 = $4,500,000

2023 $2,500,000 + 6,000,000 = $8,500,000

2024 $2,500,000

P14-7=Issuance and Retirement of Bonds; Income Statement

a.

cash 40,800,000

bonds payable 40,800,000

retirement of the 9% bond on January 2

Bonds payable 28,157,112

Loss on extinguishment of debt 3,042,888

Cash 31,200,000

b. the loss is reported as an other income and expenses item