Solution-What amount should be recorded as initial cost of

What amount should be recorded as initial cost of machine

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Question - On December 31, 2019, Bessy Co. purchased a machine in exchange for a noninterest bearing note requiring eight payments of P200,000. The first payment was made on December 31, 2019 and the others are due annually on December 31. At date of issuance, the prevailing rate of interest for this type of note was 11%.

PV of ordinary annuity of 1 at 11% for 8 periods 5.146

PV of annuity of 1 in advance at 11% for 8 periods 5.712

Required -

1. What amount should be recorded as initial cost of the machine?

2. What is the discount on note payable on December 31, 2019?

3. What is the interest expense for 2020?

4. What is the carrying amount of the note payable on December 31, 2020?

Reference no: EM133095591

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What amount should be recorded as initial cost of machine

Reference no: EM133095591

Reference no: EM133095591

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