On December 31, 2015 the Clearwater Corporation acquired a custom made plant asset by issuing a promissory note with a face value of $ 750,000, a due date of December 31, 2020, and a stated (coupon) rate of interest of 2 Interest is com pounded annually and is payable at the end on each year The fa...

Using the spreadsheet approach N I Y PV PMT FV Excel ...

On December 31, 2015 the Clearwater Corporation acquired a custom- made plant asset by issuing a promissory

Question:

On December 31, 2015 the Clearwater acquired a custom- made plant asset by issuing a promissory note with a of $ 750,000, a due date of December 31, 2020, and a stated (coupon) rate of interest of 2%. Interest is com-pounded annually and is payable at the end on each year. The fair value of the customized asset is not readily determinable and the note receivable is not publicly traded. Given the company’s incremental borrowing rate and current market conditions, the imputed rate of interest for the note is estimated as 6%.
Determine the present value of the note and prepare the journal entry to record the transaction for Clearwater Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...