ACFI 340 INTERMEDIATE ACCOUNTING I Homework- BRIDGEWATER STATE UNIVERSITY
I. Time Value of Money and Recognizing Revenue
MMMM Corporation produced fire suppression equipment system for the main factory of Morrison Door Inc. Upon delivery of the equipment of June 1, 2020, MMMM Corporation accepted a zero-interest note with a total face value of $1,500,000 payable in three years.
MMMM Corporation determined that an interest rate of 9.25% was appropriate for providing financing to Morrison Door Inc. over three years.
A. Compute the fair value of the sales transaction implied by the terms of the agreement.
B. Determine the amounts of sales revenue and interest revenue that MMMM Corporation should recognize in its income statement for the year ended December 31, 2020.
II. MMMM Corporation produced pollution abatement equipment at a cost of $950,000 for the main production facility of Quest Aeronautics. Upon delivery of the equipment on June 30, 2020, MMMM Corporation accepted a zero-interest note with a total face value of $2,000,000 payable in semi-annual installments of $250,000 over four years from Quest Aeronautics to finance the equipment. The first semi-annual payment of $250,000 was due from Quest Aeronautics on December 31, 2020.
MMMM Corporation determined that an interest rate of 8.5% was appropriate for providing financing to Quest Aeronautics over four years.
A. Compute the fair value of the sales transaction implied by the terms of the agreement.
B. Determine the amounts of sales revenue and interest revenue that MMMM Corporation should recognize in its income statement for the year ended December 31, 2020.
III. MMMM Corporation produced waste removal equipment at a cost of $380,000 for the Camden, New Jersey plant of GLF Petrochemicals. Upon delivery of the equipment on November 1, 2020, MMMM Corporation accepted a five-year, $850,000 note bearing 4% (APR) interest from GLF Petrochemicals to finance the equipment. Under the terms of the note, interest was due quarterly with the $850,000 face value of the note due in full at maturity in five years.
MMMM Corporation determined that an interest rate of 9.6% was appropriate for providing financing to GLF Petrochemicals over five years.
A. Compute the fair value of the sales transaction implied by the terms of the agreement.
B. Determine the amounts of sales revenue and interest revenue that MMMM Corporation should recognize in its income statement for the year ended December 31, 2020.
IV. MMMM Corporation produced cleaning equipment at a cost of $380,000 for the Callahan Auto Parts factory in Sandusky, Ohio. Upon delivery of the equipment on October 1, 2020, MMMM Corporation accepted a 10-year, $1,200,000 note bearing 3% (APR) interest from Callahan Auto Parts to finance the equipment. Under the terms of the note, interest was due semi-annually with the $1,200,000 face note due in full at maturity in 10 years.
MMMM Corporation determined that an interest rate of 10.5% was appropriate for providing financing to Callahan Auto Parts over 10 years.
A. Compute the fair value of the sales transaction implied by the terms of the agreement.
B. Determine the amounts of sales revenue and interest revenue that MMMM Corporation should recognize in its income statement for the year ended December 31, 2020.
V. MMMM Corporation produced waste collection equipment at a cost of $480,000 for the main production facility of Quinto Enterprises. Upon delivery of the equipment on January 2, 2020, MMMM Corporation accepted a zero-interest note with a total face value of $1,000,000 payable in annual installments of $100,000 over ten years from Quinto Enterprises to finance the equipment. The first annual payment of $100,000 was due from Quinto Enterprises on January 2, 2020.
MMMM Corporation determined that an interest rate of 10.2% was appropriate for providing financing to Quinto Enterprises over ten years.
A. Compute the fair value of the sales transaction implied by the terms of the agreement.
B. Determine the amounts of sales revenue and interest revenue that MMMM Corporation should recognize in its income statement for the year ended December 31, 2020.
Format your homework according to the give formatting requirements:
a. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
b. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
c. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.