User Account

All Pages

What is the amount of interest expense

Assignment Help Accounting Basics
Reference no: EM131806752

Question - On January 1, 2011, Garner Company sold property to Ager Company which originally cost Garner $760,000. There was no established exchange price for this property. Ager gave Garner a $1,200,000 zero-interest-bearing note payable in three equal annual installments of $400,000 with the first payment due December 31, 2011. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a $1,200,000 note payable in three equal annual installments of $400,000 at a 10% rate of interest is $994,800. What is the amount of interest expense that should be recognized by Ager in 2011, using the effective-interest method?

a. $0.

b. $40,000.

c. $99,480.

d. $120,000.

Reference no: EM131806752

Questions Cloud

What are the interest rates on a savings bond : What are the interest rates on a savings bond, a 90-day note, and a 1-year note?
Interest and principal will be repaid : The amount borrowed will be $2000, and all interest and principal will be repaid at the end of year 10. How much more interest would be paid if the interest
Discuss how much is uncollectible account expenses for 2014 : If uncollectible acccounts are determined by the pecentage of sales methods to be 4% of the credit sales
What is the payback period : A machine costs $5240 and produces benefits of $1000 at the end of each year for 8 years. Assume an annual interest rate of 10%.
What is the amount of interest expense : What is the amount of interest expense that should be recognized by Ager in 2011, using the effective-interest method
Important in determining strategies in business : Why social and environmental responsibility are important in determining strategies in business.
What is the annual subsidy : A proposed steel mill may include a co-generation electrical plant. This plant will add $2.3M in first cost with net annual savings of $0.27M considering.
Record the ad as a prepaid asset and expense the cost : On July 16, 2013, Y & P Enterprise paid $3,000,000, Record the ad as a prepaid asset and expense the cost after it airs during the Super Bowl
Explain curative factors that occurred in the group : Explain intragroup conflict that occurred and recommend strategies for managing the conflict.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd