What is the interest expense recorded for this note

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Reference no: EM133265163

Case: On March 1, 2020, DPN Company sold land to RNN Company. There was no established market price for the land.
RNN gave DPN a 2,400,000 non-interest bearing note payable in 3 equal annual installments of 800,000 with the first payment due on February 28,2021.

The note has no ready market. The prevailing rate of interest for a note of this type is 10%.
The present value of a 2,400,000 note payable in 3 equal annual installments of 800,000 at a 10% rate of interest is 1,989, 600.

Question 1.) What is the interest expense recorded for this note on December 31,2020?

Question 2.) What is the carrying amount of the note payable on December 31,2020?

Question 3.) How much is the accrued interest expense recorded for this note on December 31,2020?

Reference no: EM133265163

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