An entity purchased a plant asset under a deferred payment contract. The agreement was to pay 10,000 per year for five years. The plant asset is initially measured at ? Choices: a. 50,000 b. 50,000 plus interest c. Present value of 10,000 annuity for five years at an imputed interest. d. Present value of 50,000 for five years at imputed interest.
An entity purchased a plant asset under a deferred payment contract. The agreement was to pay 10,000 per year for five years. The plant asset is initially measured at ? Choices: a. 50,000 b. 50,000 plus interest c. Present value of 10,000 annuity for five years at an imputed interest. d. Present value of 50,000 for five years at imputed interest.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An entity purchased a plant asset under a deferred payment contract. The agreement was to pay 10,000 per year for five years. The plant asset is initially measured at ?
Choices:
a. 50,000
b. 50,000 plus interest
c. Present value of 10,000 annuity for five years at an imputed interest.
d. Present value of 50,000 for five years at imputed interest.
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