On November 1, year 20, nightingale sold land to bluebird company in exchange for a $750,000 non-interest
Question:
On November 1, year 20, nightingale sold land to bluebird company in exchange for a $750,000 non-interest bearing note due November 1, year 30, the prevailing rate of interest for a note of this type was not available, the cost of the land when purchased by nightingale was $250,000. Nightingale would have accepted $558,070 in cash for the land.
1.) Calculate the gain on sale that Nightingale will record from the sale of the land.
2.) Indicate the interest rate implicit in the note receivable.
3.) Calculate interest revenue recorded in December 31, year 20 income statement.
4.) Indicate the carrying value of the note receivable reported on the December 31, Year 20 balance sheet.
5.) Indicate the total interest revenue that Nightingale will record over the ten year life of the note.
