Note with Fair Value Not Equal to Cash Consideration on January

question 201

Essay

Note with fair value not equal to cash consideration On January 1, 2013, Senegal Corp.lent $50,000 to its CEO, interest-free.However, the loan is repayable in five instalments, each December 31, until paid.The market rate for similar loans (with similar credit risk)is 4%. Instructions
a)Calculate the present value (fair value)of this loan (round to the nearest dollar).
b)Prepare the journal entry to record this transaction.

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Definitions:

Goodwill Message

Communication designed to foster a positive relationship between the sender and the recipient, often expressing thanks or appreciation.

Specific Points

Detailed and precise statements or facts that support an argument or contribute to an understanding of a larger topic.

Customer's Complaint

Feedback or grievances expressed by a customer regarding a company's product or service, indicating dissatisfaction that the business may address to improve.

Standard Form Letter

A template letter used for sending the same message to multiple recipients, often customizable for specific details.