On January 1, 2022, McLean AG makes the two following acquisitions. 1. Purchases land having a fair
Question:
On January 1, 2022, McLean AG makes the two following acquisitions.
1. Purchases land having a fair value of €300,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of €505,518.
2. Purchases equipment by issuing a 6%, 8-year promissory note having a maturity value of €400,000 interest payable annually. The company has to pay 11% interest for funds from its bank.
Instructions
a. Record the two journal entries that should be recorded by McLean AG for the two purchases on January 1, 2022.
b. Record the interest at the end of the first year on both notes.
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Step by Step Answer:
a For the first acquisition the journal entry would be Debit Land 300000 Credit Promissory Note Paya...View the full answer
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Related Book For 
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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