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How do compute borrowing rate if is interest bearing note

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A private enterprise sold some merchandise for $160,000 on January 1, 2020. The customer paid $20,000 in cash and issued a note for the remainder. The principal will be due in 2 years, and a 5% interest is due every December 31st.

Problem 1: Assume that the customer's borrowing rate is unknown and that the merchandise cash price is $150,000 (everything else holds true). Calculate the imputed interest rate and the interest revenue to be recorded on December 31, 2020 under IFRS.

Problem 2: How do compute the borrowing rate if it is interest bearing note?

Reference no: EM132904576

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