ACCOUNTING-On January 1, 2014, NS Power lent $100,000 to its CEO,

ACCOUNTING-On January 1, 2014, NS Power lent $100,000 to its CEO,

Question # 00131526 Posted By: solutionshere Updated on: 11/08/2015 03:31 PM Due on: 12/08/2015
Subject Business Topic General Business Tutorials:
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On January 1, 2014, NS Power lent $100,000 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 7%.

Instructions

a) Calculate the present value (fair value) of this loan (round to the nearest dollar).

b) Assume any interest is salary for the CEO. Prepare the journal entry to record this transaction.

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    Tutorial # 00125986 Posted By: solutionshere Posted on: 11/08/2015 03:31 PM
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