Two independent situations follow. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. On January 1, 2020, Kingbird Inc. bought land that had an assessed value of $390,000 at the time of purchase. A $550,000, non-interest-bearing note due on January 1, 2023, was given in exchange. There was no established exchange price for the land, and no ready market value for the note. The interest rate that is normally charged on a note of this type is 9%. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, determine at what amount the land should be recorded at January 1, 2020. (Hìnt: Refer to Chapter 3 for tips on calculating.) Determine the interest expense to be reported in 2020 related to this transaction. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, eg. 5,275.) Cost of land to be recorded $ 424699 Interest expense to be recorded 38223 List of Accounts On January 1, 2020, Ayayai Furniture Ltd. borrowed $2 million (face value) from Aurora Inc., a major customer, through non- interest-bearing note due in 2 years. Because the note was non-interest-bearing, Ayayai Furniture agreed to sell furniture to this customer at lower than market price. A 8% rate of interest is normally charged on this type of loan. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the amount that the note would be recorded at on January 1, 2020. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, eg. 5,275.) Note to be recorded on January 1, 2020 %24 %24 %24
Two independent situations follow. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. On January 1, 2020, Kingbird Inc. bought land that had an assessed value of $390,000 at the time of purchase. A $550,000, non-interest-bearing note due on January 1, 2023, was given in exchange. There was no established exchange price for the land, and no ready market value for the note. The interest rate that is normally charged on a note of this type is 9%. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, determine at what amount the land should be recorded at January 1, 2020. (Hìnt: Refer to Chapter 3 for tips on calculating.) Determine the interest expense to be reported in 2020 related to this transaction. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, eg. 5,275.) Cost of land to be recorded $ 424699 Interest expense to be recorded 38223 List of Accounts On January 1, 2020, Ayayai Furniture Ltd. borrowed $2 million (face value) from Aurora Inc., a major customer, through non- interest-bearing note due in 2 years. Because the note was non-interest-bearing, Ayayai Furniture agreed to sell furniture to this customer at lower than market price. A 8% rate of interest is normally charged on this type of loan. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the amount that the note would be recorded at on January 1, 2020. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, eg. 5,275.) Note to be recorded on January 1, 2020 %24 %24 %24
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Two independent situations follow.
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
On January 1, 2020, Kingbird Inc. bought land that had an assessed value of $390,000 at the time of purchase. A $550,000,
non-interest-bearing note due on January 1, 2023, was given in exchange. There was no established exchange price for the
land, and no ready market value for the note. The interest rate that is normally charged on a note of this type is 9%.
Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, determine at what amount the land should be recorded
at January 1, 2020. (Hint: Refer to Chapter 3 for tips on calculating.) Determine the interest expense to be reported in 2020
related to this transaction. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final
answers to 0 decimal places, eg. 5,275.)
Cost of land to be recorded
$
424699
Interest expense to be recorded
38223
List of Accounts
On January 1, 2020, Ayayai Furniture Ltd. borrowed $2 million (face value) from Aurora Inc., a major customer, through non-
interest-bearing note due in 2 years. Because the note was non-interest-bearing, Ayayai Furniture agreed to sell furniture to
this customer at lower than market price. A 8% rate of interest is normally charged on this type of loan.
Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the amount that the note would be recorded
at on January 1, 2020. (Hìnt: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed
in the factor table provided and round final answers to 0 decimal places, eg. 5,275.)
Note to be recorded on January 1, 2020
$
List of Accounts
%24
%24
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education