The user cost of capital will be 15 units.
Price of new fabricating machine= 60 units of output
Price of a one-year-old machine = 51 units of output
Marginal cost of fabricating machine = 165 - 2K
Real interest rate = 10%
We'll then calculate depreciation which will be:
= (60 - 51)/60 × 100
= 9/60 × 100
= 15%
Therefore, the cost of capital will be:
= (Interest rate + Depreciation) × Price
= (0.10 + 0.15) × 60
= 0.25 × 60
= 15
Therefore, the user cost of capital is 15 units
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Summarize red lines and reverse red lining and why they are unethical lending practices
Answer:
3 For example, redlining has been used to describe discriminatory practices by retailers, both brick-and-mortar and online. Reverse redlining is the practice of targeting neighborhoods (mostly non-white) for higher prices or lending on unfair terms such as predatory lending of subprime mortgages. A 2017 study by Federal Reserve Bank of Chicago economists found that redlining—the practice whereby banks discriminated against the inhabitants of certain neighborhoods—had a persistent adverse impact on the neighborhoods, with redlining affecting homeownership rates, home values and credit scores in 2010.
2. If information is disseminated, what happens to it?
A) It is altered
B) It is distributed
C) It is destroyed
D) It is stored
Answer:
b
Explanation:
by definition, disseminate means to distribute or broadcast information
Job order costing can be applied or used at the same time with
a. actual costing system
b. normal costing system
c. both a and b
d. none of the above
Read the passage. Then answer the question that follows. Nikia designs and produces board games that she sells online. She formed a small company and hired two employees to help design, carve, and paint the individual pieces for each game. Because it takes so much labor to produce each game, the company completes and sells only a few games per month, and each one costs a lot of money. After some research, Nikia purchased a 3D printer that can produce game pieces much more quickly than a person can Which answer BEST represents how Nikia's investment in capital goods will affect the market for Nikia's board games?
O an increase in demand
O a decrease in demand
O an increase in supply
O a decrease in supply
I would say the C. is the correct answer, because if the 3D Printer prints the pieces faster, the games are sold more frequently. I hope this helps, and that it makes sense to you.
High costs are associated with high
unemployment. What economic
phenomena is associated with high
unemployment?
A. Economic Growth
B. Economic Stability
C. Economic Depression
Answer:
C. Economic Depression
Explanation:
Economic Depression is when an economy goes into financial turmoil/ struggles.
Earlier this week, Trump called off a secret meeting at Camp David with Taliban and
Afghan government leaders and declared the peace talks "dead." As the September
11 anniversary began in Afghanistan, a rocket exploded at the U.S. Embassy just
after midnight. No injuries were reported.
They both describe the events that occurred on September 11, 2001, and who
was responsible for them.
They both describe the extra security measures that were taken at airports after
September 11, 2001.
They both highlight some of the problems that survivors and victims of the 9/11
attacks still face today.
They both highlight the continued conflict between the U.S. and Afghanistan
since the 9/11 attacks
Answer:
NEW YORK (AP) — People who were too young on 9/11 to even remember their lost loved ones, and others for whom the grief is still raw, paid tribute with wreath-layings and the solemn roll call of the dead Wednesday as America marked the 18th anniversary of the worst terror attack on U.S. soil.
“Eighteen years. We will not forget. We cannot forget,” Bud Salter, who lost his sister, Catherine, said at ground zero.
President Donald Trump laid a wreath at the Pentagon, telling victims’ relatives: “This is your anniversary of personal and permanent loss.”
“It’s the day that has replayed in your memory a thousand times over. The last kiss. The last phone call. The last time hearing those precious words, ‘I love you,’” the president said.
Later, former President George W. Bush, who was in office on 9/11, and then-Defense Secretary Donald Rumsfeld attended another wreath-laying at the Pentagon.
Near Shanksville, Pennsylvania, the third site where planes crashed on Sept. 11, 2001, Vice President Mike Pence credited the crew and passengers who fought back against the hijackers with protecting him and others in the U.S. Capitol that day.
“I will always believe that I and many others in our nation’s capital were able to go home that day and hug our families because of the courage and selflessness of your families,” said Pence, who was an Indiana congressman at the time. Officials concluded the attackers had been aiming the plane toward Washington.
Nearly 3,000 people were killed when terrorist-piloted planes slammed into the World Trade Center, the Pentagon and the field in Pennsylvania.
After reading part of the long list of names, Parboti Parbhu choked up as she spoke from the ground zero podium about her slain sister, Hardai. Even after nearly two decades, “there’s no easy way to say goodbye,” she said.
By now, the heritage of grief has been handed down to a new generation, including children and young adults who knew their lost relatives barely or not at all.
Jacob Campbell was 10 months old when his mother, Jill Maurer-Campbell, died on 9/11.
“It’s interesting growing up in a generation that doesn’t really remember it. I feel a connection that no one I go to school with can really understand,” Campbell, a University of Michigan sophomore, said as he attended the ceremony.
Like the families, the nation is still grappling with the aftermath of Sept. 11. The effects are visible from airport security checkpoints to Afghanistan, where the post-9/11 U.S. invasion has become America’s longest war. The aim was to dislodge Afghanistan’s then-ruling Taliban for harboring al-Qaida leader and Sept. 11 mastermind Osama bin Laden.
Earlier this week, Trump called off a secret meeting at Camp David with Taliban and Afghan government leaders and declared the peace talks “dead.” As the Sept. 11 anniversary began in Afghanistan, a rocket exploded at the U.S. Embassy just after midnight, with no injuries reported.
Al-Qaida’s current leader used the anniversary to call for more attacks on the U.S. and other targets.
In New York, Nicholas Haros Jr., who lost his mother, Frances, reminded the audience of the al-Qaida attackers and tore into Democratic Rep. Ilhan Omar of Minnesota over her recent “Some people did something” reference to 9/11.
“Our constitutional freedoms were attacked, and our nation’s founding on Judeo-Christian values was attacked. That’s what ‘some people’ did. Got that now?” he said to applause.
Omar, one of the first Muslim women elected to Congress, has said she didn’t intend to minimize what happened on Sept. 11, and accused critics of taking her words out of context. She tweeted Wednesday that “September 11th was an attack on all of us.”
The dead included Muslims, as Zaheda Rahman underscored after reading names at ground zero. She called her uncle, Abul Chowdhury, a “proud Muslim-American man who lived his life with a carefree nature, a zeal for adventure and a tenacity which I emulate every single day.”
Others made a point of spotlighting the suffering of firefighters, police and others who died or fell ill after being exposed to the smoke and dust at ground zero.
A compensation fund for people with potentially Sept. 11-related health problems has paid out more than $5.5 billion so far. More than 51,000 people have applied. Over the summer, Congress made sure the fund won’t run dry . The sick also gained new recognition this year at the World Trade Center site, where a memorial glade was dedicated this spring.
___
Agribusiness Systems
Test
Unt To
Act
TIERRING
012854
Which option identifies the concept being utilized in the following scenario
A cereal manufacturer is planning to improve its facility by reparing the paingots and installing
lighting for a cost of $50,000. They determine that, given a 5 percent interest rate, with a $10.000
payment, it would take them 10 years to break even
payback period analysis
time value of money analysis
discounted payback
period analysis
discount rate of return analysis
What concept is being used
what is professonal education?
Answer:" Professional education is a formalized approach to specialized training in a professional school through which participants acquire content knowledge and learn to apply techniques. Although content is what the participant is expected to learn by attending professional school, such an education also helps the participant acquire the competencies needed for proper practice and behavior."
Explanation:
As a business owner, explain the importance of scanning the internal and external environment of a business.
Answer:
1. Identification of strength
2.identificationof weakness
3. Identification of opportunity
4. Identification of threat
5. Optimum of use of resources
It is December 31, the end of the year, and the controller of Saxton Corporation is applying the lower-of-cost-or-market (LCM) rule to inventories. Before any year-end adjustments, the company reports the following data: LOADING...(Click the icon to view the data.) Saxton determines that the net realizable value of ending inventory is $48,000. Show what Saxton should report for ending inventory and for cost of goods sold. Identify the financial statement where each item appears. Financial statement where item is reported Balance to be reported Inventory Balance Sheet Cost of goods sold Income Statement 393000
The inventory that will be reported on the balance sheets is $43000 while the cost of goods sold is $455000
Your question is incomplete. A similar question will be used on guiding you. Let's assume the following figures:
The net realizable value of ending inventory = $43000Historical cost of ending inventory = $58000Cost of goods sold = $440000To know the inventory amount that will be reported on the balance sheets, you've to select the lowest between the net realizable value of the ending inventory and the historical cost of ending inventory. The lowest is $43000.
The cost of goods sold that'll be reported will be:
= $440,000 + $15,000
= $455,000
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Mark the types of businesses that are most likely to need
personal liability protection for their owners. (Select five
answers.).
Driver's education classes
A dressmaker
A children's daycare center
Skiing lessons
Web design service
Cleaning service
An in-home nurse
A bakery
Graphic design service
A jewelry maker
Answer:
Driver's education classes, a children's daycare center, skiing lessons, an in-home nurse, and a bakery are more likely to need personal liability protection for their owners.
Explanation:
Those are business types that put people's health and safety at risks.
Question 1
A) Sarah has an apple and Ava has a bag of chips. Sarah would rather consume the bag of chips, and Ava would prefer to consume the apple. Which of the following is an example of bartering?(1 point)
Sarah pays Ava $1 for her bag of chips.
Ava pays Sarah $1 for her apple.
Sarah trades her apple for Ava's bag of chips.
Sarah and Ava consume the goods they currently possess.
Question 2
A) Gold has historically functioned as money. This is due, in part, to the willingness of others to accept it as valid payment for goods and services. In this case, gold is functioning as a(n)(1 point)
store of value.
unit of account.
fiat money.
medium of exchange.
Question 3
A) Consider a hypothetical economy in which rice functions as money. In addition to being valued as money, rice is valued as a consumer good. In this scenario, rice is said to be(1 point)
fiat money.
representative money.
currency.
commodity money.
Question 4
A) Elementary school students often trade food items at lunch in an effort to have the best lunch possible. In one elementary school, pudding cups have become so popular that they have become a unit of account. This means that(1 point)
a pudding cup will likely have the same purchasing power tomorrow as it does today.
a pudding cup entitles its holder to a share of some valuable asset.
students are eager to accept pudding cups in exchange for any lunch item.
the price of other lunch items is expressed in quantities of pudding cups.
Question 5
A) Which of the following illustrates the difference between the U.S. dollar, a form of fiat money, and a U.S. gold certificate, a representative currency?(1 point)
A U.S. dollar does not have value in addition to its value as money.
A gold certificate does not represent a claim to some specific asset.
A gold certificate does not have value in addition to its value as money.
1. An example of bartering is Sarah trades her apple for Ava's bag of chips.
2. Gold has historically functioned as money because it is a medium of exchange.
3. In the hypothetical economy, rice is said to be a commodity money.
4. When Pudding cups serve as a unit of account, it means that the price of other lunch items is expressed in quantities of pudding cups.
5. The difference between the U.S. dollar, and a U.S. gold certificate is a U.S. dollar does not have value in addition to its value as money.
Trade by barter is when people exchange goods with goods. Money is not used in a trade by barter. Trade by barter was used before the invention of money. For example, a trade by barter occurs when Sarah trades her apple for Ava's bag of chips.
Commodity money is money for which its value comes from the commodity from which it is made.
Fiat money is currency whose value is not backed up by any asset. Representative money is money whose value is backed up an asset.
Money can be described as something that is accepted as a means of payments for products.
Functions of money
1. Medium of exchange: money serves as a medium of exchange when it is accepted as payment for goods and services. For example, 2 ounces of gold is accepted as means of payment for a dress.
2. Unit of account: money can be used to determine the value goods and services, For example, 2 cups of puddings is equivalent to plate of fruits.
3. Store of value: money can retain its value over the long term, this it can be used as a store of value.
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Answer:
1. Sarah trades her apple for Ava's bag of chips.
2. medium of exchange.
3. commodity money.
4. the price of other lunch items is expressed in quantities of pudding cups.
5. U.S dollars does not represent a claim to some specific assets
Suppose that Markus Braun was trying to decide where he should open businesses next. He wants to make a rational decision. What should be his first step in making that decision?
a . Define the problem.
b. Generate alternative courses of action.
c, dentify criteria for judging the decision.
d. Compute the optimal decision.
Markus Braun's first step in making a rational decision is a. Define the problem.
The definition of the problem of where to open businesses will enable Markus to:
Establish critical decision criteria that will be used to adjudge the different choices.Ascertain and evaluate the optimal locations that will meet his investment requirements.
Six decision-making processes identified for achieving satisfactory outcomes include:
Step 1 is the Identification of the Problem Step 2 is the Establishment of the Decision Criteria Step 3 is the Weighing of the Decision Criteria Step 4 is the Generation or Identification of Alternatives Step 5 is the Evaluation of Alternatives Step 6 is the Selection of the Best Alternative
Thus, wherever these processes are followed, the probability of achieving favorable outcomes become higher.
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For a corporation, direct investment from owners occurs when:
For a corporation, direct investment from owners occurs when there is an influx of capital to get equity shares
A corporation is an institution or organization that is made up of a group of people who come together and act as a single entity.
When there is a direct investment from owners of a corporation, then this means that there is an influx of capital to buy equity shares.
There are different ways of making a direct investment such as:
Buying sharesOpening a company in another country, etcTherefore, when a corporation makes a direct investment, then they are buying equity shares
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Which of the following tasks would be very difficult using only a keyboard and text?
Renaming a file
Drawing a picture
Writing a document
Playing games
Sending an e-mail
Answer:Which of the following tasks would be very difficult using only a keyboard and text?
Renaming a file
Drawing a picture
Writing a document
Playing games
Sending an e-mail
Explanation:
Drawing a picture, tasks would be very difficult using only a keyboard and text. Therefore, option (b) is correct.
What is keyboard?
The term keyboard refers to the optical of the computer. A person used the keyboard as the mainly work to the typing. The keyboard as the multitasking work as the included the letters, numbers, symbols, and the F1 to F12, signs. and the other things as the included to the easy the work.
Drawings are mainly done by hand. However, as technology advanced, the computer became the feature that was used to draw the drawing. The computer, as the icon, paints the drawing with many options like as forms, brushes, different shades of color, and other tools. However, utilizing the keyboard is a more challenging.
Therefore, option (b) is correct.
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Two types of multitasking are:
O Competitive tasking and complex tasking
O Task switching and dual tasking
O Task switching and competitive tasking
A hair salon acquired 100 new customers last year. Cost in the marketing and sales were as follows:
Marketing Costs = $ 1,000
Sales Costs = $ 10,000
Salaries = $ 96,000
What was the customer acquisition cost?
If a hair salon acquired 100 new customers last year. Cost in the marketing and sales were are marketing Costs $1,000, Sales Costs $10,000 and Salaries $96,000.What the customer acquisition cost will be is $1,070
Using this formula
Customer acquisition cost=Sales costs+ Marketing costs +Salaries ÷ Number of customers acquired
Where:
Marketing Costs =$1,000
Sales Costs = $10,000
Salaries = $96,000
Number of customers acquired=100
Let plug in the formula
Customer acquisition cost=$1,000+$10,000+$96,000÷100
Customer acquisition cost=$107,000÷100
Customer acquisition cost=$1,070
Inconclusion if a hair salon acquired 100 new customers last year. Cost in the marketing and sales were are marketing Costs $1,000, Sales Costs $10,000 and Salaries $ 96,000. What the customer acquisition cost will be is $1,070
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Answer:
The answer is $10 dollars
Explanation:
I took a test and got it right
An attempt to assess the worth of each job relative to other jobs is known as
Select one:
a. job analysis.
b. job evaluation
c. the wage-level decision.
d. performance appraisal.
e. benefit determination.
Can someone help??
An assessment is often carried out to fine out if someone or someone is performing up to task or doing what is expected.
An attempt to assess the worth of each job relative to other jobs is known as job evaluation.Job Evaluation is simply refered to as a form of stepwise process of knowing the capabilities or worth of one job when compared to another job in the organisation. During this evaluation, the known capabilities of various jobs are thoroughly viewed or assessed so that wages can be paid based upon the worth of the job.
Conclusively, Relative worth is known by based on job description and job specification and as such, job evaluation helps to know wages and salary level for all jobs.
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Someone help choose correctly
Answer:
Bottom one for sure and least I think is either top one or the second to last.
Distinguish between financial and cost accounting.
Cost accounting compiles the cost of raw materials, work-in-process, and finished goods inventory, while financial accounting incorporates this information into its financial reports (primarily into the balance sheet). ... Financial accounting personnel issue reports only at the end of a reporting period.
Justine heard that an Australian newspaper has just published a very interesting article about the koala bear, her favorite animal. Justine is most likely to find this article online, as the internet allows for quick access to which type of news?
Select one:
a.
local news
b.
world news
c.
honest news
d.
entertainment news
The FDA cannot control the content of celebrity Tweets on prescription drugs.
Group of answer choices
True
False
Answer:
True
Explanation:
The FDA guidance requires pharmaceutical companies to present both benefit and risk information when promoting their FDA-regulated products on social media. ... Such information needs to be provided regardless of any character space constraints on some social media platforms such as Twitter.
True, the FDA cannot control the content of celebrity Tweets on prescription drugs.
What is FDA?Located under the Department of Health and Human Services, the Food and Drug Administration (FDA or USFDA) is a federal organization. The FDA is in charge of ensuring the safety of food, tobacco products, dietary supplements, prescription and over-the-counter medications, vaccines, biopharmaceuticals, blood transfusions, medical devices, electromagnetic radiation emitting devices (ERED), cosmetics, animal foods & feed, and veterinary products in order to protect and advance public health. The Federal Food, Drug, and Cosmetic Act (FD&C) is the FDA's major area of enforcement, although the organization also upholds related regulations and other laws, most notably Section 361 of the Public Health Service Act. A large portion of this regulatory-enforcement job concerns the regulation of condoms, lasers, cell phones, and other items, as well as the prevention and control of disease in settings ranging from domestic pets to donated human sperm for assisted reproduction.
Depending on the kind of product, any potential risks, and the agency's regulatory authority, many safety regulation schemes exist. For instance, the FDA controls practically every aspect of prescription pharmaceuticals, including testing, manufacturing, labelling, advertising, marketing, efficacy, and safety; meanwhile, the FDA primarily controls labelling and safety for cosmetics. With a set of stated standards and a sparse number of facility inspections, the FDA monitors the majority of products. On Form 483, inspection observations are recorded.
A number of laws passed by the US Congress and interpreted by the FDA control how the Food and Drug Administration regulates foods and dietary supplements. The Federal Food, Drug, and Cosmetic Act and related laws give the FDA the power to regulate the quality of substances sold as food in the US and to keep an eye on any claims made on food labels regarding their composition or health benefits.
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Jamal is creating a four-fold brochure about the parts of a business including production, finance, marketing, and customer service. If he only wants to highlight the key aspects of each part with several bullet points, what information should he include? Briefly explain why you feel this is the most important information about each part of a business.
If Jamal is creating a four-fold brochure about the parts of a business including production, finance, marketing, and customer service If he only wants to highlight the key aspects of each part with several bullet points, the information he should include will be:
Jamal should carry out adequate and accurate research concerning the vital information that should be included in the brochure.
The information that he should include in his brochure should be:
He should include relevant information that the customers need in the brochure.He should show professionalism or he should show how professional he his when it has to to with his business.He should highlight the most important aspect of the business such as the company products and services. He shown reveal the purpose and objective of the business including what the business stand for.The reason why i feel this is the most important information about each part of a business is because it will enables people to know that he is good at what he does which will in turn help to promote the business.
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Which of the following are true of NASA? You may choose more than one answer.
NASA's goal is to explore rock formations on Earth.
NASA was formed in 1958.
NASA stands for the National Aeronautics and Space Administration.
NASA was eventually based out of Orlando, Florida.
Answer:
NASA stands for the national aeronautics and space administration
Explanation:
I know this is right, just not sure about the other ones
Answer:
NASA was formed in 1958, NASA stands for the National Aeronautics and Space Administration.
Explanation:
Hope this helps! :)
An electric utility company builds a new power plant, and management wants to decide whether to build the plant at Site 1 or at Site 2. The cost of building the plant is $10 million at Site 1 and $20 million at Site 2. If the company builds at Site 1, and an earthquake occurs there during construction in the next three years, then the plant construction will have to be terminated (losing an estimated $10 million), due to the earthquake the company will lose another $10 million, and they will have to build the plant at Site 2. Based on experience, the company estimates that there is a 20% chance that an earthquake will occur at Site 1 during the next three years. For $1 million, the company can commission a detailed geological study of Site 1: the result of this study will be either favorable or unfavorable. In the past, similar geological studies have been unfavorable on 95% of the occasions in which an earthquake occurred in the following three years, and favorable on 90% of the occasions in which an earthquake did not occur in the following three years. 3.1 How should the company proceed to minimize its expected cost of constructing the plant
To minimize the expected cost of building the plant the best option for this company is to build at site 1
The best way to determine the best option for this company is to carefully analyze and compare the options presented:
Site 1:Cost for building the plant $10 million
However, if an Earthquake occurs in the next 3 years:
Expected loss: $10 million (cost of the plant) + 10 million (cost paid due to earthquake) + $20 million (cost for building a new plant) = $40 million
Site 2:Cost for building the plant $20 million
This means an Earquake in site 1 would make the cost of building in site 1 higher than the cost of building the plant at site 2 ($40 million vs $20 million)
Now, let's analyze the probabilities of an Earthquake
20% chance of earthquakes (company estimation)95% unfavorable for earthquakes (previous studies)90% favorable for earthquakes not occurring (previous studies)These previous studies show the probability of an Earquake not occurring is about 92.5%, which is quite low. Based on this and the comparison of prices for building in site 1 and site 2, the best option is to build at site 1 because it is very likely there is not an earthquake and the cost is only $10 million. Moreover, the company can pay $1 million to double-check this probability, which leads to a total cost of $11 million.
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Match the term with the correct definition.
Question 25 options:
type of reaction that has occurred in a flask when it becomes warmer
components are present in a fixed ratio
the carbon-oxygen bond is an example
type of reaction from rotting tree
tastes bitter
tastes sour
gold is an example
the lithium-bromide bond is an example
type of reaction from forest fire
type of reaction that has occurred in a flask when it becomes colder
compounds are present in an unfixed ratio
1.
ionic bond
2.
covalent bond
3.
exothermic reaction
4.
endothermic reaction
5.
combustion reaction
6.
decomposition reaction
7.
compound
8.
element
9.
mixture
10.
acid
11.
base
Answer:
i wish i knew
Explanation:
sorry
Im sorry but these are the only few I know, or at least think they are correct;-;
Answer:
3.
type of reaction that has occurred in a flask when it becomes warmer: exothermic reaction
8:
gold is an example: Element
10:
tastes sour: acid
2:
the carbon-oxygen bond is an example: covalent bond
4:
type of reaction that has occurred in a flask when it becomes colder: endothermic reaction
What is the collection of direct, non-advertising messages a company presents to the public about itself, its brand, and its products? A. Sales promotions B. Market research C. Direct marketing D. Public relations Please select the best answer from the choices provided A B C D
Answer:
Is a D. Public relations
which of the following business is LEAST likely to be organized as a sole proprietorship?
Answer: Their business and personal assets are at risk. managerial ability is limited, sole proprietorship form of business organization is not suitable for large-scale business.
Explanation:
Explain what options there are for student loans.
Answer:
federal student loans and private loans.
Explanation:
Michek Company loans Sarasota Company $2,000,000 at 6% for 3 years on January 1, 2020. Michek intends to hold this loan to maturity and has the financial ability to do so. The fair value of the loan at the end of each reporting period is as follows. December 31, 2020 $2,050,000 December 31, 2021 2,020,000 December 31, 2022 2,000,000 Prepare the journal entry(ies) at December 31, 2020, and December 31, 2022, for Michek related to these bonds, assuming (a) it does not use the fair value option, and (b) it uses the fair value option. Interest is paid on January 1.
Michek Company's Journal Entries related to loans to Sarasota Company are as follows:
a) Journal Entries without using fair value option:
December 31, 2020:
Debit Interest Receivable $120,000
Credit Interest Revenue $120,000
To record the 6% interest due on January 1.December 31, 2022:
Debit Interest Receivable $120,000
Credit Interest Revenue $120,000
To record the 6% interest due on January 1.b) Journal Entries with fair value option
December 31, 2020:
Debit Loan Receivable $50,000
Credit Unrealized Gain from Fair Value $50,000
To record the fair value of the loan.Debit Interest Receivable $120,000
Credit Interest Revenue $120,000
To record the 6% interest due on January 1.December 31, 2022:
Debit Unrealized Loss from Fair Value $20,000
Credit Loan Receivable $20,000
To record the fair value of the loan.Debit Interest Receivable $120,000
Credit Interest Revenue $120,000
To record the 6% interest due on January 1.Data and Calculations:
January 1, 2020, amount of loan = $2,000,000
Interest rate = 6%
Period of loan = 3 years
December 31, 2020 2021 2022
Fair value of loan $2,050,000 2,020,000 2,000,000
Interest income $120,000 $120,000 $120,000 ($2,000,000 x 6%)
Payment of interest = January 1
December 31, 2021:
Debit Unrealized Loss from Fair Value $30,000
Credit Loan Receivable $30,000
Debit Interest Receivable $120,000
Credit Interest Revenue $120,000
Thus, the Loan Receivable account's balance at December 31 each year varies only when using the fair value option.
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