As of January 1, the Singletary Company owes the First Bank $350,000 which is due on December
Question:
As of January 1, the Singletary Company owes the First Bank $350,000 which is due on December 31. Since Singletary seems unable to repay the note, the bank agreed that Singletary can “settle” this balance by agreeing to make four, annual installments on each of the next four years, provided that it adds a “due on demand” clause to the note. Specifically, the lender will “do its best” not to call the note “provided that no adverse significant shift in operations occurs." However, First Bank has the sole discretion to ascertain if these adverse conditions arose, and then to call the note due immediately. How should Singletary account for this above situation?
Required:
a) Provide responses for each independent case on the appropriate accounting treatment.
b) Support your responses with code sections from the FASB Accounting Standards Codification (ASC).
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward