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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.
Service Period
The period of time over which employee services are rendered in exchange for an award, common in the context of stock compensation plans.
Stock Option Plan
A compensation scheme in which employees are given the option to purchase company stock at a discounted price, often used to align employees' interests with those of the shareholders.
Stock Options
Financial derivatives that confer the right, but not the obligation, to buy or sell shares of stock at a specified price within a certain time frame.
Common Stock
Holding shares in a company, granting the holder voting privileges on company issues and entitlement to dividends.
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