Determine the note payable carrying value on january

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On January 1, 2020, TPM Inc. acquires a piece of equipment for a list price of $300,000. It pays $20,000 immediately and writes a note for the remainder. Annual interest of 3% is due every December 31st, and the principal of the note is payable in 6 years. TPM's incremental borrowing rate is 6%, while the seller's incremental borrowing rate is 7%. TPM is a public company. It depreciates its equipment using the diminishing balance method at 15%. The equipment's residual value is $40,000 at the end of its useful life.

Required

Problem 1) Prepared all required journal entries for the years 2020 and 2021.

Problem 2) Determine the Asset's net book value on January 1, 2024.

Problem 3) Determine the note payable carrying value on January 1, 2024

Reference no: EM132807435

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