Compute the gain or loss on the sale

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Question - Zobell Corporation sells equipment with a book value of $8,000, receiving a non-interest-bearing note due in three years with a face amount of $10,000. There is no established market value for the equipment. The interest rate on similar obligations is estimated at 12%. Compute the gain or loss on the sale and the discount on notes receivable, and make the necessary entry to record the sale. Also, make the entries to record the amortization of the discount at the end of the first, second, and third year using effective-interest amortization.

Reference no: EM133078586

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