What amount of interest expense would be recorded

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Question - On January 1, year 1, Willow Wind Co. acquires an industrial machine from Mamie Lou Co. The cash price (fair value) of the machine is $37,938. Willow Wind Co. gives a three-year, interest-bearing note with a maturity value of $40,000. The note requires annual payments of 6% of face value, or $2,400 per year, payable at the end of each year. The interest rate implicit in the note is 8% per year. What amount of interest expense would be recorded at the end of year 2?

Reference no: EM132908619

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