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What is the amount of interest income

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Question - On January 1, 2021, Oriole Company sold property to Sandhill Co. which originally cost Oriole $2730000. There was no established exchange price for this property. Sandhill gave Oriole a $4230000 zero-interest-bearing note payable in three equal annual installments of $1410000 with the first payment due December 31, 2021. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a $4230000 note payable in three equal annual installments of $1410000 at a 10% rate of interest is $3506670. What is the amount of interest income that should be recognized by Oriole in 2021, using the effective-interest method?

Reference no: EM132918858

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