On January 1, 2023, Oriole Corp. sold property to Marvin Ltd., for which Oriole had originally paid $570,000. There was no established exchange price for this property. Marvin gave Oriole a $957600, zero-interest-bearing note, payable in three equal annual instalments of $319200, with the first payment due December 31, 2023. The note also has no ready market. The market rate of interest for a note of this type is 10%. The present value of a $957600 note payable in three equal annual instalments of $319200 at 10% is $793804. To the nearest dollar, and using the effective interest method, how much interest revenue should Oriole recognize in 2023? ○ $79380 ○ $31920 $95760 ○ $0
On January 1, 2023, Oriole Corp. sold property to Marvin Ltd., for which Oriole had originally paid $570,000. There was no established exchange price for this property. Marvin gave Oriole a $957600, zero-interest-bearing note, payable in three equal annual instalments of $319200, with the first payment due December 31, 2023. The note also has no ready market. The market rate of interest for a note of this type is 10%. The present value of a $957600 note payable in three equal annual instalments of $319200 at 10% is $793804. To the nearest dollar, and using the effective interest method, how much interest revenue should Oriole recognize in 2023? ○ $79380 ○ $31920 $95760 ○ $0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2023, Oriole Corp. sold property to Marvin Ltd., for which Oriole had originally paid $570,000. There was no
established exchange price for this property. Marvin gave Oriole a $957600, zero-interest-bearing note, payable in three equal annual
instalments of $319200, with the first payment due December 31, 2023. The note also has no ready market. The market rate of
interest for a note of this type is 10%. The present value of a $957600 note payable in three equal annual instalments of $319200 at
10% is $793804. To the nearest dollar, and using the effective interest method, how much interest revenue should Oriole recognize in
2023?
○ $79380
○ $31920
$95760
○ $0
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