Questions - Answer each of these unrelated questions.
Q1. On January 1, 2010, Fishbone Corporation sold a building that cost $260,900 and that had accumulated depreciation of $101,300 on the date of sale. Fishbone received as consideration a $249,900 noninterest-bearing note due on January 1, 2013. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2010, was 11%. At what amount should the gain from the sale of the building be reported?
Q2. On January 1, 2010, Fishbone Corporation purchased 310 of the $1,000 face value, 11%, 10-year bonds of Walters Inc. The bonds mature on January 1, 2020, and pay interest annually beginning January 1, 2011. Fishbone purchased the bonds to yield 11%. How much did Fishbone pay for the bonds?
Q3. Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,400 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8% applies to this contract, how much should Fishbone record as the cost of the machine?
Q4. Fishbone Corporation purchased a special tractor on December 31, 2010. The purchase agreement stipulated that Fishbone should pay $24,300 at the time of purchase and $5,600 at the end of each of the next 10 years. The tractor should be recorded on December 31, 2010, at what amount, assuming an appropriate interest rate of 11%?
Q5. Fishbone Corporation wants to withdraw $130,100 (including principal) from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%?