Problem 14-12 (Algo) Noninterest-bearing installment note [LO14-3] At the beginning of 2024, VHF Industries acquired a machine with a fair value of $6,942,160 by issuing a two-year, noninterest-bearing note in the face amount of $8 million. The note is payable in two annual installments of $4 million at the end of each year. Required: 1.What is the effective rate of interest implicit in the agreement? 2. to 4. Prepare the necessary journal entries. 5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 9%. Prepare the journal entry to record the purchase of the machine. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) es Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Req 5 What is the effective rate of interest implicit in the agreement? Interest rate %
Problem 14-12 (Algo) Noninterest-bearing installment note [LO14-3] At the beginning of 2024, VHF Industries acquired a machine with a fair value of $6,942,160 by issuing a two-year, noninterest-bearing note in the face amount of $8 million. The note is payable in two annual installments of $4 million at the end of each year. Required: 1.What is the effective rate of interest implicit in the agreement? 2. to 4. Prepare the necessary journal entries. 5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 9%. Prepare the journal entry to record the purchase of the machine. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) es Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Req 5 What is the effective rate of interest implicit in the agreement? Interest rate %
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 23PC
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![Problem 14-12 (Algo) Noninterest-bearing installment note [LO14-3]
At the beginning of 2024, VHF Industries acquired a machine with a fair value of $6,942,160 by issuing a two-year, noninterest-bearing
note in the face amount of $8 million. The note is payable in two annual installments of $4 million at the end of each year.
Required:
1.What is the effective rate of interest implicit in the agreement?
2. to 4. Prepare the necessary journal entries.
5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar
risk was 9%. Prepare the journal entry to record the purchase of the machine.
Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1)
es
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 4
Req 5
What is the effective rate of interest implicit in the agreement?
Interest rate
%
<Req 1
Req 2 to 4 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F158b00a9-d507-4869-904a-d71965dd74eb%2F226de562-3283-4290-a4d4-d1ff0df23c96%2Fh4w1oo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 14-12 (Algo) Noninterest-bearing installment note [LO14-3]
At the beginning of 2024, VHF Industries acquired a machine with a fair value of $6,942,160 by issuing a two-year, noninterest-bearing
note in the face amount of $8 million. The note is payable in two annual installments of $4 million at the end of each year.
Required:
1.What is the effective rate of interest implicit in the agreement?
2. to 4. Prepare the necessary journal entries.
5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar
risk was 9%. Prepare the journal entry to record the purchase of the machine.
Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1)
es
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 4
Req 5
What is the effective rate of interest implicit in the agreement?
Interest rate
%
<Req 1
Req 2 to 4 >
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