On January 1, 2009, Standard Incorporated Is Going to Issue

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The Answer is The present value of both financial instruments on January 1, 2009, at an 10% market rate of interest is $10,494. Because each note payable would be carried on the balance sheet at its present value, Standard's January 1, 2009, balance sheet would be unaffected by the choice of financial instruments issued. The presentation under each of the alternative liabilities at January 1, 2009 would be:

The present value of both financial instruments on January 1, 2009, at an 10% market rate of interest is $10,494. Because each note payable would be carried on the balance sheet at its present value, Standard's January 1, 2009, balance sheet would be unaffected by the choice of financial instruments issued. The presentation under each of the alternative liabilities at January 1, 2009 would be: Because interest expense is the market rate of interest times the carrying value at the beginning of the year, during 2009 interest expense would also be the same. Under either financial instrument, interest expense would be .10 x $10,494 = $1,049. Net income for 2009 would be unaffected by the choice of notes.

Because interest expense is the market rate of interest times the carrying value at the beginning of the year, during 2009 interest expense would also be the same. Under either financial instrument, interest expense would be .10 x $10,494 = $1,049. Net income for 2009 would be unaffected by the choice of notes.

On January 1, 2009, Standard Incorporated Is Going to Issue

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On January 1, 2009, Standard Incorporated Is Going to Issue

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Correct Answer:
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