Reference no: EM133209527
Tim Inc., a publicly accountable entity, sells specialized equipment on December 31, 2020. The equipment could have been purchased for a cash price of $3,250,000 however, the purchaser opted to sign a note payable with the following terms:
- interest payments of $75,000 on December 31, 2021, 2022, 2023 and 2024 and
- a final payment of $3,500,000 on December 31, 2024.
1. Show all journal entries relative to this note for Tim Inc. (the seller) for the years ending December 31, 2020 and 2021.
2. If instead, Tim Inc. is a private company subject to ASPE, prepare the December 31, 2021 journal entry using the more simple method allowed under ASPE.
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