4. Please provide FASB citation....Miller Company has beenoperating for just 3 years, producing specialty ski equipment. Todate the company has been able to finance its operations withinvestments from its principal owner, Bode Miller, and cash flowsfrom operations. However, current expansion plans will require someborrowing to expand the companyâs production line. As part of theexpansion plan, Miller will acquire some used equipment by signinga zero-interest-bearing note. The note has a maturity value of$50,000 and matures in 5 years. A reliable fair value measure forthe equipment is not available, given the age and specialty natureof the equipment. As a result, Millerâs accounting staff is unableto determine an established exchange price for recording theequipment (nor the interest rate to be used to record interestexpense on the long-term note). They have asked you to conduct someaccounting research on this topic. Prepare a formal business memoto the CFO, Lindsey Vonn, including responses to the followingquestions. Be sure to provide codification references for yourresponses. a. Identify the authoritative literature that providesguidance on the zero-interest-bearing note. Use some of theexamples to explain how the standard applies in this setting. b.How is present value determined when an established exchange priceis not determinable and a note has no ready market? What is theresulting interest rate often called? c. Where should a discount orpremium appear in the financial statements? What about issuecosts?
4. Please provide FASB citation....Miller Company has beenoperating for just 3 years, producing specialty ski equipment. Todate the company has been able to finance its operations withinvestments from its principal owner, Bode Miller, and cash flowsfrom operations. However, current expansion plans will require someborrowing to expand the companyâs production line. As part of theexpansion plan, Miller will acquire some used equipment by signinga zero-interest-bearing note. The note has a maturity value of$50,000 and matures in 5 years. A reliable fair value measure forthe equipment is not available, given the age and specialty natureof the equipment. As a result, Millerâs accounting staff is unableto determine an established exchange price for recording theequipment (nor the interest rate to be used to record interestexpense on the long-term note). They have asked you to conduct someaccounting research on this topic. Prepare a formal business memoto the CFO, Lindsey Vonn, including responses to the followingquestions. Be sure to provide codification references for yourresponses. a. Identify the authoritative literature that providesguidance on the zero-interest-bearing note. Use some of theexamples to explain how the standard applies in this setting. b.How is present value determined when an established exchange priceis not determinable and a note has no ready market? What is theresulting interest rate often called? c. Where should a discount orpremium appear in the financial statements? What about issuecosts?
