Solution-Prepare journal entry to record the acquisition of

Prepare journal entry to record the acquisition of machine

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Reference no: EM132885356

Problem - Determination of Acquisition Cost - In January 2019, Cordova Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of $215,000, was paid for as follows:

Down payment $ 55,000

Note payable in 4 equal annual payments starting in January 2020 $120,000

600 shares of Cordova preferred stock with a mutually agreed value of $100 per share (par value $100) $ 60,000

Fair rate of interest on the non-interest-bearing note 10%

Required -

1. Determine the cost of the machine. What principle guides the determination of the cost of the machine?

2. Prepare the journal entry to record the acquisition of the machine.

3. How would your answer change, if at all, if the $215,000 cash price were not available?

Reference no: EM132885356

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Prepare journal entry to record the acquisition of machine

Reference no: EM132885356

Reference no: EM132885356

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