Reference no: EM132658260
On December 31, 2020, Grouper Corporation has $8.9 million of short-term debt in the form of notes payable that are due in 2021 to Provincial Bank. On January 28, 2021, Grouper enters into a refinancing agreement with the bank that permits it to refinance its debt by up to 59% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5 million in February and a high of $7 million in October during the year 2021. The interest cost of the maturing short-term debt is 16%, and the new agreement calls for a fluctuating interest rate at 1% points above the prime rate (currently prime is 8%) with the notes due in 2022. Grouper informed the bank that it wishes to refinance as much of its debt as possible prior to its December 31, 2020 balance sheet being issued on February 15, 2021.
Question 1: Assuming that Grouper follows ASPE, have a partial balance sheet ready for Grouper Corporation at December 31, 2020 that shows how its $8.9 million of short-term debt should be presented.
Question 2: At December 31, 2020, Bridgeport Inc. is involved in a lawsuit.
a. Under existing standards in IAS 37, prepare the December 31 entry assuming it is probable (and very likely) that Bridgeport will be liable for $580,000 as a result of this suit.
b. Under existing standards in IAS 37, prepare the December 31 entry, if any, assuming it is probable (although not likely) that Bridgeport will be liable for a payment as a result of this suit.
c. Under existing standards in IAS 37, prepare the December 31 entry assuming it is not probable that Bridgeport will be liable for $580,000 as a result of this suit.
d. Prepare the December 31 entry assuming it is probable (and very likely) that Bridgeport will be liable for $580,000 as a result of this suit. Assume that Bridgeport follows ASPE.
e. Prepare the December 31 entry, if any, assuming it is probable (although not likely) that Bridgeport will be liable for $580,000 as a result of this suit. Assume that Bridgeport follows ASPE.