Tobias Mortgage Company

Tobias Mortgage is one of the best mortgage Roseville Lending Company. We offer 30 years Term Mortgage Loan service as it is most desirable and makes it easy for you to repay a large amount of loan every month. From the past 13 years we are providing mortgage services to people who are unable to build a house due to lack of money.

 

Horton Company purchased a building on January 2 by signing along-term $480,000 mortgage with monthly payments of $4,500. Themortgage carries an interest rate of 10 percent. The amount owed onthe mortgage after the first payment will be

Q1. “Fair value accounting is argued to be conceptually and practically preferable to amortized cost accounting for most financial instruments, especially for financial institutions holding matched positions in these instruments.” What are your views about this statement?

Q2. Mortgage Banks’ main revenues are usually fees for mortgage origination and servicing as well as gains on the sale of mortgages. Although amortization and impairment of Mortgage Service Rights are logically expenses and losses, respectively, mortgage banks often deduct these items directly from mortgage servicing fees as if they are contra-revenues. Prepare an Income Statement of a Mortgage Bank with at least five items of revenue and three items of expenses with imaginary figures.

Q3. Statement of Financial Accounting Standards (SFAS) NO. 140 defines transfers of financial assets as conveyances of noncash financial assets by and to someone other than the issuer of the assets. These transfers include securitizations. What motivates issuers to securitize? Give some reasons.

Mandarin Company bought land for $100,000 that it held for apossible future plant site. Mandarin Company bought the propertyfor $20,000 cash payment and by signing a note secured by amortgage on the land in the amount of $80,000.

Property values in the area increased significantly. When theland was worth, $300,000, Mandarin Company took out a new mortgageof $250,000 and paid off the $100,000 existing mortgage loan.

Property values in the area then decreased a great deal, andMandarin Company could no longer make the payments on the mortgage.When Mandarin Company’s land had a fair market value of $175,000,the lender foreclosed on the mortgage. The lender forgave theentire debt because of Mandarin Company’s deteriorating financialcondition. The balance of the mortgage at the time ofthe foreclosure was $190,000 but Mandarin Company was not bankruptor insolvent.

How much gain or loss did Mandarin Company realize on theforeclosure? How much, if any, gain or loss must it recognize? Howmuch gross income does Mandarin Company recognize as income fromthe discharge of indebtedness?

Required: The memo should include the facts, issue, conclusionand discussion on your answer.