On January 1, 2020, Queen Ltd. sold equipment to King Company. There was no established exchange price for the property and King gave Queen a zero-interest bearing note. The note is to be repaid on December 31, 2022. The market rate of interest for a loan of this type is 10%. King reports using the effective interest method. King also paid $l,200 for delivery and installation separately to a freight company

Required; 

a. At what value should King record the equipment?

b. At what value would the note be reported in the books of King at December 31, 2020.

c. what interest expense would King report for the 2021 year?

Answer rating: 100% (QA)

Value of notes payable at January 1 2020 2333791 Interest on 2333791 at ... View the full answer