Asked by nadezhda kurilov on Apr 28, 2024
Verified
Smith Delivery Services bought a truck by paying $44, 000 cash down and signing a $148, 000 non-interest-bearing note due in five years for the balance.Current interest rates were 8%.Actuarial information for five periods at 8% follows:
Amount of 1 1.469 Present value of 10.680 Amount of annuity of 1 5.867 Present value of annuity of 1 3.993\begin{array}{llr} \text { Amount of 1 } &1.469\\ \text { Present value of 1} &0.680\\ \text { Amount of annuity of 1 } &5.867\\ \text { Present value of annuity of 1 } &3.993\\\end{array} Amount of 1 Present value of 1 Amount of annuity of 1 Present value of annuity of 1 1.4690.6805.8673.993
Required:
Compute the amount that should be charged to the asset account.
Non-interest-bearing Note
A promissory note or loan agreement that does not accrue interest over time, requiring the borrower to repay only the principal amount.
Present Value
The current worth of a future sum of money or stream of cash flows, discounted at a specified rate of return.
Actuarial Information
Data and analyses related to assessing financial risks and uncertainties, typically in the context of insurance and finance, relying on mathematical and statistical methods.
- Record the procurement and improvement of tangible assets such as lands, plants, and equipment within journal entries.
- Evaluate and interpret the principles of interest capitalization.
Verified Answer
Learning Objectives
- Record the procurement and improvement of tangible assets such as lands, plants, and equipment within journal entries.
- Evaluate and interpret the principles of interest capitalization.
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