What amount of interest expense should be included

Reference no: EM131881633

Problem

On January 1, Year 3, Saucerer Company bought a building with an assessed value of $220,000 on the date of purchase. Saucerer gave as consideration a $400,000 noninterest-bearing note due on January 1, Year 6. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type at January 1, Year 3, was 10%. What amount of interest expense should be included in Saucerer's Year 4 income statement?

Reference no: EM131881633

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