What should be the balance of the discount


On January 1, 2010, Crown Company sold property to Leary Company. There was no established exchange price for the property, and Leary gave Crown a $2,000,000 zero-interest-bearing note payable in five equal annual installments of $400,000, with the first payment due December 31, 2010. The prevailing rate of interest for a note of this type is 9%. The present value of the note at 9% was $1,442,000 at January 1, 2010. What should be the balance of the Discount on Notes Payable account on the books of Leary at December 31, 2010 after adjusting entries are made, assuming that the effective-interest method is used?

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: What should be the balance of the discount
Reference No:- TGS089928

Expected delivery within 24 Hours