semiannually on January 1 and July 1. From the bond issuance Girard would realize net cash receipts of
25. Bell Co. is a defendant in a lawsuit that could result in a large payment to the plaintiff. Bell’ s attorney believes that there is a 90 % chance that Bell will lose the suit, and estimates that the loss will be anywhere from $ 5,000,000 to $ 20,000,000 and possibly as much as $ 30,000,000. None of the estimates are better than the others. What amount of liability should Bell report on its balance sheet related to the lawsuit?
26. Stark, Inc. has $ 1,000,000 of notes payable due June 15, year 2. At the financial statement date of December 31, year 1, Stark signed an agreement to borrow up to $ 1,000,000 to refinance the notes payable on a long-term basis. The financing agreement called for borrowings not to exceed 80 % of the value of the collateral Stark was providing. At the date of issue of the December 31, year 1 financial statements, the value of the collateral was $ 1,200,000 and was not expected to fall below this amount during year 2. On the December 31, year 1 balance sheet, Stark should classify
27. On October 1, year 1, a company borrowed cash and signed a 3- year interest-bearing note on which both the principal and interest are payable on October 1, year 4. The company did not elect to use the fair value option for reporting financial liabilities. At December 31, year 3, accrued interest should
28. On January 1, year 1, Jaffe Corporation issued at 95 five hundred of its 9 %, $ 1,000 bonds. Interest is payable semiannually on July 1 and January 1, and the bonds mature on January 1, year 11. Jaffe paid bond issue costs of $ 20,000 which are appropriately recorded as a deferred charge. Jaffe uses the straight-line method of amortizing bond discount and bond issue costs. Assume Jaffe does not elect the fair value option for reporting financial liabilities. On Jaffe’ s December 31, year 1 balance sheet, the bonds payable should be reported at their carrying value of