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In 20×5, F1 was able to renegotiate its bank loan and replace it with a new loan without a restrictive covenant.
The new bank requires annual audited ?nancial statements. The loan is payable immediately if Fl exceeds a
debt to equity ratio of .65. At the end of ZUXS the debt to equity ratio was .60. The old loan had … Show more
The new bank requires annual audited ?nancial statements. The loan is payable immediately if Fl exceeds a
debt to equity ratio of .65. At the end of ZUXS the debt to equity ratio was .60. The old loan had … Show more
In 20X5, FI was able to renegotiate its bank loan and replace it with a new loan without a restrictive covenant. The new bank requires annual audited financial statements. The loan is payable immediately if FI exceeds a debt to equity ratio of .65. At the end of 20X5 the debt to equity ratio was .60. The old loan had unamortized transaction costs and financing fees of $800,000. The transaction costs and financing fees associated with the new loan are $1.2 million. The new loan is substantially larger than the old loan to assist with the construction of a new sawmill facility. Journal entries
