On June 1, 20X4, Blueskies Airways Ltd., a publicly traded Calgary-based airline with a December 31 year-end, was downsizing its operations and entered into a contract with singing sensation Britney Spears to sell a used Bombardier-manufactured regional jet aircraft to the rock star for a price of USD10 million.
The aircraft was delivered to Ms. Spears on July 31, 20X4. At the time of the sale Blueskies’ books reflected a cost of CAD17 million and accumulated depreciation of CAD3 million for the jet. The terms of the sale required Ms. Spears to pay the purchase price in full on July 31, 20X5, after her world concert tour. Simple, non-compounding interest on the unpaid balance accrues in U.S. dollars at the annual rate of 5% and is payable on July 31, 20X5.
On July 31, 20X4, Blueskies entered into a forward contract with its bank to exchange the USD10,000,000 proceeds from the aircraft sale for Canadian dollars on July 31, 20X5. The exchange rates are as follows (intra-period averages can be imputed):
Required:
Prepare all required journal entries to record the sale of the jet, the balance of the loan receivable, interest receivable, and settlement of t
Need help with this assignment or a similar one? Place your order and leave the rest to our experts!