A private enterprise sold some merchandise for $160,000 on January 1, 2020. The customer paid $20,000 in cash and issued a note for the remainder. The principal will be due in 2 years, and a 5% interest is due every December 31st. The customer’s borrowing rate is unknown.  Assume that the customer’s borrowing rate is unknown and that the merchandise cash price is $150,000 (everything else holds true). Calculate the imputed interest rate and the interest revenue to be recorded on December 31, 2020 under IFRS.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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 A private enterprise sold some merchandise for $160,000 on January 1, 2020. The customer paid $20,000 in cash and issued a note for the remainder. The principal will be due in 2 years, and a 5% interest is due every December 31st.

The customer’s borrowing rate is unknown. 

Assume that the customer’s borrowing rate is unknown and that the merchandise cash price is $150,000 (everything else holds true). Calculate the imputed interest rate and the interest revenue to be recorded on December 31, 2020 under IFRS.

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