Harper company commonly issues long-term notes payable to, Ask an Expert

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Harper Company commonly issues long-term notes payable to its various lenders. Harper has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Harper has elected to use the fair value option for the long-term notes issued to Barclay's Bank and has the following data related to the carrying and fair value for these notes.

Carrying Value Fair Value

December 31, 2013 $81,000 $81,000

December 31, 2014 67,000 64,000

December 31, 2015 54,000 58,000

Instructions

(a) Prepare the journal entry at December 31 (Harper's year-end) for 2013, 2014, and 2015 to record the fair value option for these notes.

(b) At what amount will the note be reported on Harper's 2014 balance sheet?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9964033

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