Sabonis Cosmetics Inc. purchased machinery on December 31, 2014, paying $50,000 down and agreeing to pay the

Question:

Sabonis Cosmetics Inc. purchased machinery on December 31, 2014, paying $50,000 down and agreeing to pay the balance in four equal installments of $40,000 that are payable each December 31. An assumed interest rate of 8% is implicit in the purchase price. Sabonis prepares in accordance with IFRS.
Instructions
(a) Prepare the journal entries that would be recorded for the purchase and for the payments and interest on December 31, 2014, 2015, 2016, 2017, and 2018.
(b) From the lender's perspective, what are the advantages of an installment note compared with an interest-bearing note?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...