At the Beginning of 2017, Gannon Company Received a Three-Year

question 23

Multiple Choice

At the beginning of 2017, Gannon Company received a three-year zero-interest-bearing $1,000 trade note.The market rate for equivalent notes was 8% at that time.Gannon reported this note as a $1,000 trade note receivable on its 2017 year-end statement of financial position and $1,000 as sales revenue for 2017.What effect did this accounting for the note have on Gannon's net earnings for 2017, 2018, 2019, and its retained earnings at the end of 2019, respectively?

• A)overstate, overstate, understate, zero
• B)overstate, understate, understate, understate
• C)overstate, overstate, overstate, overstate
• D)None of these answer choices are correct.

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Definitions:

Go To Trial

The process in which a legal case is presented before a judge or jury in a court of law to resolve a dispute between parties through examination of evidence and application of legal principles.

Joint Legal Custody

A legal arrangement where both parents share the responsibility and authority to make decisions concerning their child's upbringing.

Major Decisions

Significant rulings or conclusions made by an authoritative body or individual that have a considerable impact.

Inter Vivos Trust

A trust created by the grantor, settlor, and effective during the grantor’s lifetime – that is, a trust not established by a will.