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E7.14(LO 6,8)(Notes Receivable with Zero Interest Rate) By December 31,2023, Clearing Corp....

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Accounting

E7.14(LO 6,8)(Notes Receivable with Zero Interest Rate) By December 31,2023, Clearing Corp. had performed a significant amount of environmental consulting services for Rank Ltd. Rank was short of cash, and Clearing agreed to accept a $200,000, noninterest-bearing note due December 31,2025, as payment in full. Rank is a bit of a credit risk and typically borrows funds at a rate of 12%. Clearing is much more creditworthy and has various lines of credit at 9%. Clearing reports under IFRS.
Instructions
Prepare the journal entry to record the transaction on December 31,2023, for Clearing.
Assuming Clearings fiscal year end is December 31, prepare the journal entry required at December 31,2024.
Assuming Clearings fiscal year end is December 31, prepare the journal entry required at December 31,2025.
What are the amount and classification of the note on Clearing Corp.s SFP as at December 31,2024?
Assume instead that Clearing reports under ASPE and uses the straight-line method to amortize the discount on the note. What would the interest income be relating to the note for 2024 and 2025?

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