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Interest revenue:
At the end of 2012, a manufacturer sells machinery to a customer for $90,000. $30,000 is paid immediately, and the customer signs a promissory note for the remainder. The note specifies that another $30,000 is to be paid at the end of 2013, and the final $30,000 is to be paid at the end of 2014.
A rate of 6% per year would normally be charged for this type of financing. However, the manufacturer provides free financing; no interest is charged.
a. What amount should be recorded for the note receivable when this sale is made?
b. How much sales revenue should be recognized in 2012?
c. How much interest revenue should the manufacturer recognize in 2013?
d. How much of the 2013 payment will be applied towards reducing the principal amount of the note receivable?
e. How much interest revenue should the manufacturer recognize in 2014?
Illustrations of Income statement Profit/Loss on disposal of non-current assets Material write down or reversal of write down on assets e.g. PPE inventory and debtors.
In Section we had established an association among the effective and nominal rate of interest where compounding arise n times a year that is as given: r = (1 + k/m ) m - 1
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Question: State of the Economy Probability of state occurring IBM Return (%) ATT Return (%)
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