Question
In: Accounting
Given the following information, prepare the following journal entries. A firm purchases a piece of equipment...
Given the following information, prepare the following journal
entries.
A firm purchases a piece of equipment for its assembly line by
issuing a 3-year, 5% interest bearing note for $100,000 when the
market rate for such notes is 4%. The firm will make interest
payment at the end of each year and then pay the full principle
balance at the end of the 3-year term. The firm uses the fair value
of the note as the estimate of the fair value of the piece of
equipment. Show your calculations for the fair value of the
equipment at the date of purchase and for the periodic interest
expense.
a) Date of purchase
b) End of first year
c) End of second year
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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