Using the information from TR7-8 now assume the company is a private company and it has elected to use straight-line amortization.

Data from from TR7-8

Dharma, a public company, sold a piece of equipment at the beginning of Year 1, receiving a $10,000, two-year 2% note. Interest is paid at the end of each year. Market interest rates are assumed to be 10%.

Required:

1. Calculate the present value of the note receivable.

2. Prepare entries for the sale, interest revenue, and cash collection each year for two years.