1, year 3. The total payment on November 1, year 3, will include both principal and interest. Assuming
interest at a 10 % rate, the cost of the machine would be the total payment multiplied by what time value of
money concept? Question 10:
Theoretically, the proceeds from the sale of a bond will be equal to Question 11:
On December 27, year 1, Holden Company sold a building, receiving as consideration a $ 400,000 noninterest
bearing note due in 3 years. The building cost $ 380,000 and the accumulated depreciation was $ 160,000 at
the date of sale. The prevailing rate of interest for a note of this type was 12 %. The present value of $ 1 for
three periods at 12 % is 0.71. In its year 1 income statement, how much gain or loss should Holden report on
the sale? Question 12:
Harrison should record the acquisition cost of the franchise on January 1, year 1, at
Question 13: