Prepare the journal entry for the issue of the note

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Reference no: EM132553816

The government lent $120,000 to Sandhill Industries, who signed a 5-year, zero-interest note dated January 1, 2021 to help finance the construction of a building. The market rate of interest is 5% and the effective interest method of amortization is used. The loan will be forgiven if Sandhill provides employment for a specified number of individuals for a specified period of time. If these conditions are not met, the amount is due to the government in full in five years. Sandhill believes it will be able to meet the conditions.

Using 1. factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the amount of the note payable issued to Sandhill, who follows IFRS.

Question 1: Prepare the journal entry for the issue of the note on the books of Sandhill.

Question 2: Prepare the entry at December 31, 2021, the fiscal year end of the company

Reference no: EM132553816

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