Equipment with a Fair Value of $65,000 and a Cost

question 42

Short Answer

Equipment with a fair value of $65,000 and a cost basis of $60,000 is transferred to a creditor in partial settlement of a debt of $150,000 plus accrued interest of $7,500. The balance of the debt will be satisfied by 3 equal payments of $30,000 over the next three years. Which of the following journal entries best records the restructure?

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Definitions:

First Amendment

An amendment to the United States Constitution that guarantees freedoms concerning religion, expression, assembly, and the right to petition. It forbids Congress from both promoting one religion over others and also restricting an individual's religious practices.

Religious Freedom Restoration

A U.S. federal law intended to prevent laws that substantially burden a person's free exercise of their religion.

Selective Incorporation

A constitutional doctrine that ensures states cannot enact laws that infringe on the fundamental rights protected by the Bill of Rights of the U.S. Constitution.

Supreme Court

The highest federal court in the United States, having ultimate appellate jurisdiction over all federal and state court cases that involve a point of federal law.