What is the amount of interest income that should be, Ask an Expert

Accounting

On January 1, 2010, Jacobs Company sold property to Dains Company which originally cost Jacobs $760,000. There was no established exchange price for this property. Danis gave Jacobs a $1,200,000 zero-interest-bearing note payable in three equal annual installments of $400,000 with the first payment due December 31, 2010. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a $1,200,000 note payable in three equal annual installments of $400,000 at a 10% rate of interest is $994,800. What is the amount of interest income that should be recognized by Jacobs in 2010, using the effective-interest method?

View complete question

Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M971594

Have any Question?Write your Review or question?

Related Questions in Accounting Basics

Question - anwer owns a rental home and is involved in

Question - Anwer owns a rental home and is involved in maintaining it and approving renters. During the year he has a net loss of $8,000 from renting the home. His other sources of income during the year are a salary of ...

Accounting concepts and applications assignment - myob

Accounting Concepts and Applications Assignment - MYOB Practice Set with Report Complete the computerized accounting practice set - World of Games - by Pabst and Perrin (2015) on an INDIVIDUAL basis for accounting transa ...

Question - destin company signs a contract to manufacture a

Question - Destin Company signs a contract to manufacture a new 3D printer for $80,000. The contract includes installation which costs $4,000 and a maintenance agreement over the life of the printer at a cost of $10,000. ...

Question - brankov company has current assets of 95000 and

Question - Brankov Company has current assets of $ 95000 and current liabilities of $110,000. The company decides to issue stock and receives cash of $100,000. After this transaction, the company's current ratio will be: ...

Question - us steel issues a 2000000 bond at 10 for 8 years

Question - US Steel issues a $2,000,000 bond at 10% for 8 years. The market interest rate is 9%. Be sure to use the time value of money tables, not the formulas; and round your answers to the nearest whole dollars. Quest ...

Part abackgroundsaturn petcare australia and new zealand is

Part A Background: Saturn Petcare Australia and New Zealand is Australia's largest manufacturer of pet care products. Saturn have been part of the Australian and New Zealand pet care landscape since opening their first m ...

Question - a company incurred the following transactions

Question - A company incurred the following transactions: 1. Wages of $2,650 accrued at the end of the prior fiscal period were paid this fiscal period. 2. Real estate taxes of $7,100 applicable to the current period hav ...

Question - ethics classification of income statement

Question - ETHICS (Classification of Income Statement Items) As audit partner for Grupo and Rijo, you are in charge of reviewing the classification of unusual items that have occurred during the current year. The followi ...

Question - in its first month of operations swifty

Question - In its first month of operations, Swifty Corporation made three purchases of merchandise in the following sequence: (1) 290 units at $5, (2) 390 units at $7, and (3) 490 units at $8. Assuming there are 190 uni ...

Question review the following case studyfasb asc 320

Question: Review the following case study: FASB ASC 320 requires companies to assign their portfolio of investment securities into: • Trading securities. • Securities available for sale. • Held-to-maturity securities. Wr ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Accounting Basics Expert