Exhibit 13-03On January 1, 2017, Train, Inc. accepted an $80,000, non-interest bearing 3 year note in exchange for equipment it sold to Steam Company. Train originally purchased the equipment for $125,000, and it had a book value of $75,000 on the date of the sale. The note was non-interest-bearing. An assumed 11% interest rate is implicit in the agreement. Actual information for 11%, three periods, follows: Present value of 1 0.73119 Present value of annuity of 1 2.44371 Refer to Exhibit 13-03. What amount should Train record for the discount on Notes Receivable? $21,505 $58,495 $0 $16,505
Exhibit 13-03On January 1, 2017, Train, Inc. accepted an $80,000, non-interest bearing 3 year note in exchange for equipment it sold to Steam Company. Train originally purchased the equipment for $125,000, and it had a book value of $75,000 on the date of the sale. The note was non-interest-bearing. An assumed 11% interest rate is implicit in the agreement. Actual information for 11%, three periods, follows: Present value of 1 0.73119 Present value of annuity of 1 2.44371 Refer to Exhibit 13-03. What amount should Train record for the discount on Notes Receivable? $21,505 $58,495 $0 $16,505
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exhibit 13-03
On January 1, 2017, Train, Inc. accepted an $80,000, non-interest bearing 3 year note in exchange for equipment it sold to Steam Company. Train originally purchased the equipment for $125,000, and it had a book value of $75,000 on the date of the sale. The note was non-interest-bearing. An assumed 11% interest rate is implicit in the agreement. Actual information for 11%, three periods, follows:
Refer to Exhibit 13-03. What amount should Train record for the discount on Notes Receivable?
On January 1, 2017, Train, Inc. accepted an $80,000, non-interest bearing 3 year note in exchange for equipment it sold to Steam Company. Train originally purchased the equipment for $125,000, and it had a book value of $75,000 on the date of the sale. The note was non-interest-bearing. An assumed 11% interest rate is implicit in the agreement. Actual information for 11%, three periods, follows:
| Present value of 1 | 0.73119 |
| Present value of annuity of 1 | 2.44371 |
Refer to Exhibit 13-03. What amount should Train record for the discount on Notes Receivable?
$21,505
$58,495
$0
$16,505
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