On December 31, 2020, Green Bank enters into a debt restructuring agreement with Shamrock Inc., which...

 

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On December 31, 2020, Green Bank enters into a debt restructuring agreement with Shamrock Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.3-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2.3 million to $2.19 million 2. Extending the maturity date from December 31, 2020, to December 31, 2023 3. Reducing the interest rate from 10% to 8% Shamrock pays interest at the end of each year. On January 1, 2024, Shamrock Inc. pays $2.19 milion in cash to Green Bank. Shamrock prepares financial statements in accordance with IFRS 9. Prepare an entry at December 31, 2020, based on the results of your calculation. (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 o for the amounts.) Date Account Titles and Explanation Debit Credit December 31, 2020 Prepare an effective interest amortization table for the remaining term of the note. (Round answers to 0 decimal places, e.g. 5,250.) SHAMROCK INC. INTEREST PAYMENT SCHEDULE AFTER DEBT RESTRUCTURING Increase of Carrying Amount Cash Interest Effective Interest Carrying Amount Date of Note 12/31/20 12/31/21 12/31/22 12/31/23 Total Prepare the interest payment entry for Shamrock on December 31, 2022, and the entry on January 1, 2024. (Round answer to o 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 o for the amounts.) Date Account Titles and Explanation Debit Credit Assume instead that Shamrock follows ASPE. Using (1) a financial caiculator or (2) Excel function Rate, calculate the rate of interest that Shamrock should use to calculate its interest expense in future periods. (Hint: Refer to Chapter 3 for tips on calculating.) (Round answer to 4 decimal places, e.g. 1.2246%.) Rate of interest Continuing the assumption of following ASPE, prepare an effective interest amortization table for the remaining term of the note. (Round yieid values to 4 decimal places, e.g. 52.7525 and final answers to o decimal places, e.g. 5,250.) On December 31, 2020, Green Bank enters into a debt restructuring agreement with Shamrock Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2.3-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2.3 million to $2.19 million 2. Extending the maturity date from December 31, 2020, to December 31, 2023 3. Reducing the interest rate from 10% to 8% Shamrock pays interest at the end of each year. On January 1, 2024, Shamrock Inc. pays $2.19 milion in cash to Green Bank. Shamrock prepares financial statements in accordance with IFRS 9. Prepare an entry at December 31, 2020, based on the results of your calculation. (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 o for the amounts.) Date Account Titles and Explanation Debit Credit December 31, 2020 Prepare an effective interest amortization table for the remaining term of the note. (Round answers to 0 decimal places, e.g. 5,250.) SHAMROCK INC. INTEREST PAYMENT SCHEDULE AFTER DEBT RESTRUCTURING Increase of Carrying Amount Cash Interest Effective Interest Carrying Amount Date of Note 12/31/20 12/31/21 12/31/22 12/31/23 Total Prepare the interest payment entry for Shamrock on December 31, 2022, and the entry on January 1, 2024. (Round answer to o 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 o for the amounts.) Date Account Titles and Explanation Debit Credit Assume instead that Shamrock follows ASPE. Using (1) a financial caiculator or (2) Excel function Rate, calculate the rate of interest that Shamrock should use to calculate its interest expense in future periods. (Hint: Refer to Chapter 3 for tips on calculating.) (Round answer to 4 decimal places, e.g. 1.2246%.) Rate of interest Continuing the assumption of following ASPE, prepare an effective interest amortization table for the remaining term of the note. (Round yieid values to 4 decimal places, e.g. 52.7525 and final answers to o decimal places, e.g. 5,250.)