On January 1, 2024, Whispering Winds Company sold property to Oriole Company which originally cost Whispering Winds $2640000. There was no established exchange price for th property. Oriole gave Whispering Winds a $4050000 zero - interest - bearing note payable in three equal annual installments of $1350000 with the first payment due December 31, 2024 The note has no ready market. The prevailing rate of interest for a note of this type is 10% The present value of a $4050000 note payable in three equal annual installments of $13500 at a 10% rate of interest is $3357250. What is the amount of interest income that should be recognized by Whispering Winds in 2024 if the effective - interest method is used? Select answer from the options below a. $405000 b. $135000 c. $0 d. $335725

On January 1, 2024, Whispering Winds Company sold property to Oriole Company which originally cost Whispering Winds $2640000. There was no established exchange price for th property. Oriole gave Whispering Winds a $4050000 zero - interest - bearing note payable in three equal annual installments of $1350000 with the first payment due December 31, 2024 The note has no ready market. The prevailing rate of interest for a note of this type is 10% The present value of a $4050000 note payable in three equal annual installments of $13500 at a 10% rate of interest is $3357250. What is the amount of interest income that should be recognized by Whispering Winds in 2024 if the effective - interest method is used? Select answer from the options below a. $405000 b. $135000 c. $0 d. $335725

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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Question

On January 1, 2024, Whispering Winds Company sold property to Oriole Company which
originally cost Whispering Winds $2640000. There was no established exchange price for this
property. Oriole gave Whispering Winds a $4050000 zero - interest - bearing note payable in
three equal annual installments of $1350000 with the first payment due December 31, 2024.
The note has no ready market. The prevailing rate of interest for a note of this type is 10% .
The present value of a $4050000 note payable in three equal annual installments of $1350000
at a 10% rate of interest is $3357250. What is the amount of interest income that should be
recognized by Whispering Winds in 2024 if the effective - interest method is used? Select
answer from the options below a. $405000 b. $135000 c. $0 d. $335725

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