On the Pharoah Inc. is looking at moving to ASPE for its accounting standards framework from IFRS as it is no longer publicly traded and is more comparable to companies who are using ASPE. Currently it is using the effective interest rate method to amortize the discount/premium on its zero-interest note receivable portfolio. The Controller would like to lessen the amount of work wjere possible and would like to understand the impact to interest income if the company switched to straight line as allowed under ASPE. As the company Revenue Analyst, you have been asked to review a 5-year-zero-interest note with a face value of $720000, and a present value of $564139. The effective interest rate method interest income for the year is $28207. What would be the difference in interest income if the straight-line rate method is adopted?

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To calculate the interest income using the straightline rate method we first need to determine the t... View the full answer