An entity received a seven-year zero-interest bearing note on July 1, 2019 in exchange for property sold. There was no established exchange price for the property and the note has no ready market. The prevailing rate of interest rates for a note of this type as follows: Rate Date 7% July 1, 2019 6% December 31, 2019 8% July 1, 2020 9% December 31, 2020 What interest rate should be used to calculate the interest income from the transaction for the year ended December 31, 2019 and December 31, 2020?

An entity received a seven-year zero-interest bearing note on July 1, 2019 in exchange for property sold. There was no established exchange price for the property and the note has no ready market. The prevailing rate of interest rates for a note of this type as follows: Rate Date 7% July 1, 2019 6% December 31, 2019 8% July 1, 2020 9% December 31, 2020 What interest rate should be used to calculate the interest income from the transaction for the year ended December 31, 2019 and December 31, 2020?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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