On January 1, 2017, Landlord Corporation acquired the following properties: 1. Land and an apartment building in

Question:

On January 1, 2017, Landlord acquired the following properties:
1. Land and an apartment building in Toronto for $1.5 million. To finance this transaction, Landlord issued a five-year interest-free promissory note to repay $2,307,941 on January 1, 2022.
2. Vacant land in Rome, Italy for $2 million. To finance this transaction, Landlord obtained a 7% mortgage secured by the land, with a date of January 1, 2027. Interest is payable annually. If Landlord borrowed this money from the bank, the company would need to pay 9% interest.
Instructions
(a) Using time value of money tables, a financial calculator, and computer spreadsheet functions, calculate the value of the mortgage. Using the calculation from the tables record Landlord Corporation's journal entries on January 1, 2017 for each of the purchases.
(b) Record the interest at the end of the first year on both instruments using the effective interest method.
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... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...