The prevailing rate of interest for a note of this type was, Ask an Expert

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Marley Company received a seven-year zero-interest-bearing note on February 22, 2011, in exchange for property it sold to O'Lear Company. There was no established exchange price for this property and the note has no ready market. The prevailing rate of interest for a note of this type was 7% on February 22, 2011, 7.5% on December 31, 2011, 7.7% on February 22, 2012, and 8% on December 31, 2012. What interest rate should be used to find out the interest revenue from this transaction for the years ended December 31, 2011 and 2012, respectively?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M950448

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