Compute the fair value of the sales transaction implied

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Reference no: EM132497596

MMMM Corporation produced waste removal equipment at a cost of $380,000 for the Camden, New Jersey plant of GLF Petrochemicals. Upon delivery of the equipment on November 1, 2020, MMMM Corporation accepted a five-year, $850,000 note bearing 4% (APR) interest from GLF Petrochemicals to finance the equipment. Under the terms of the note, interest was due quarterly with the $850,000 face value of the note due in full at maturity in five years.

MMMM Corporation determined that an interest rate of 9.6% was appropriate for providing financing to GLF Petrochemicals over five years.

Question 1: Compute the fair value of the sales transaction implied by the terms of the agreement

Question 2: Determine the amounts of sales revenue and interest revenue that MMMM Corporation should recognize in its income statement for the year ended December 31, 2020

Attachment:- MMM corporation.zip

Reference no: EM132497596

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