What is the correct cost of the investment property at acquisition date?
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At the beginning of the current year, Zaijan Company acquired an investment property for 48 million. In the acquisition, Zaijan made a 30% down payment and issued a 5-year non-interest-bearing note fore the remainder. The equal amount of 6,720,000 is payable at the end of each year. The prevailing market rate of interest for similar instrument is 12%. To complete the transaction, Zaijan Company paid transaction costs amounting to 500,000. Round off present value factors to three decimal places.
What is the correct cost of the investment property at acquisition date?
a. 48,000,000
b. 39,125,600
c. 38,625,600
d. 24,225,600
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- Hemingway Company purchases equipment by issuing a 7-year, $210,000 non-interest-bearing note, when the market rate for this type of note is 7%. Hemingway will pay off the note with equal payments to be made at the end of each year. Required: Prepare the journal entry to record Hemingway’s acquisition of the equipment.Hemingway Company purchases equipment by issuing a 7-year, $350,000 non-interest-bearing note, when the market rate for this type of note is 10%. Hemingway will pay off the note with equal payments to be made at the end of each year. Required: Prepare the journal entry to record Hemingway’s acquisition of the equipm1. Action Company acquired an investment property with an installment price of P2,500,000. The acquisition of the property requires a down payment of 20% and a non-interest bearing note payable at the end of each year for five years. The prevailing rate of interest for similar instrument is 12%. The present value of an annuity of 12% for four periods is 3.605. Action Company incurred transaction costs amounting to P45,000 for the property. What is the cost of acquiring the property?
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- During the past several years the annual net income of Avery Company has averaged $540,000.At the present time the company is being offered for sale. Its accounting records show the bookvalue of net assets (total assets minus all liabilities) to be $2,800,000. The fair value of Avery’s netidentifiable assets, however, is $3,000,000.An investor negotiating to buy the company offers to pay an amount equal to the fair value forthe net identifiable assets and to assume all liabilities. In addition, the investor is willing to pay forgoodwill an amount equal to the above-average earnings for five years.On the basis of this agreement, what price should the investor offer? A normal return on the fairvalue of net assets in this industry is 15 percent.Samos, Inc. purchased certain plant assets under a deferred payment contract. The agreement was to pay $75,000 at year-end for each of the next three years. The plant assets should be valued at present value of a $75,000 annuity for three years discounted at the market interest rate. present value of a $75,000 annuity for three years discounted at the bank prime interest rate. $225,000. $225,000 plus imputed interest.xyz company purchased an equipment for $15,000 cash and signed a note for 5 equal payments of $10,000 at the end of each year for 5 years. The implied interest rate is 6%. At the time of acquisition, what amount would the equipment be recorded at?
