P5.1B (LO 2,4,5) (Various Time Value Situations) Answer each of these unrelated questions. a. On January 1, 2025, Manatee Corporation sold a warehouse that cost $411,000 and that had accu- mulated depreciation of $163,000 on the date of sale. Manatee received as consideration a $400,000 non-interest-bearing note due on January 1, 2029. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2025, was 8%. At what amount should the gain from the sale of the building be reported? b. On January 1, 2025, Manatee Corporation purchased 1,000 of the $1,000 par value, 6%, 20-year bonds of Fishes Inc. The bonds mature on January 1, 2045, and pay interest annually beginning January 1, 2026. Manatee purchased the bonds to yield 8%. How much did Manatee pay for the bonds? c. Manatee Corporation bought new equipment and agreed to pay for it in five equal annual install- ments of $10,000 beginning at the end of next year. Assuming that a prevailing interest rate of 10% applies to this contract, how much should Manatee record as the cost of the equipment? d. Manatee Corporation purchased a special conveyor system on December 31, 2025. The purchase
P5.1B (LO 2,4,5) (Various Time Value Situations) Answer each of these unrelated questions. a. On January 1, 2025, Manatee Corporation sold a warehouse that cost $411,000 and that had accu- mulated depreciation of $163,000 on the date of sale. Manatee received as consideration a $400,000 non-interest-bearing note due on January 1, 2029. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2025, was 8%. At what amount should the gain from the sale of the building be reported? b. On January 1, 2025, Manatee Corporation purchased 1,000 of the $1,000 par value, 6%, 20-year bonds of Fishes Inc. The bonds mature on January 1, 2045, and pay interest annually beginning January 1, 2026. Manatee purchased the bonds to yield 8%. How much did Manatee pay for the bonds? c. Manatee Corporation bought new equipment and agreed to pay for it in five equal annual install- ments of $10,000 beginning at the end of next year. Assuming that a prevailing interest rate of 10% applies to this contract, how much should Manatee record as the cost of the equipment? d. Manatee Corporation purchased a special conveyor system on December 31, 2025. The purchase
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 18DQ: LO.4, 7 In December 2019, Carl Corporation sold land it held as an investment. The corporation...
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