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What is the amount of interest income

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Question - On January 1, 2019, XYZ Company sold property to Ameer Company which originally cost XYZ Company €760,000. Ameer gave XYZ Company a €1,200,000 zero-interest-bearing note payable in three equal annual installments of €400,000 with the first payment due December 31, 2019. 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 income that should be recognized by XYZ Company in 2019, using the effective-interest method?

Reference no: EM132855680

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