On December 30, 2021, Jack company purchased an aircraft from Jill Co. in exchange for a noninterest bearing note requiring 10 payments of 450,000. The first payment was made on December 30, 2021, and the others are due annually on December 30. At the date of issuance, the prevailing rate of interest for this type of note was 12%. How much is the cost of the machine?

On December 30, 2021, Jack company purchased an aircraft from Jill Co. in exchange for a noninterest bearing note requiring 10 payments of 450,000. The first payment was made on December 30, 2021, and the others are due annually on December 30. At the date of issuance, the prevailing rate of interest for this type of note was 12%. How much is the cost of the machine?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank...

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On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000
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