DesRosier Company acquires a machine on 1 January 20X6, with a non-interest-bearing note that requires $10,000 to be paid on 31 December 20X6 and again on 31 December 20X7. The note has no explicit interest, but the prevailing interest rate is 6% on liabilities of similar risk and duration. The cash equivalent cost of the machine is unknown.

Required:

Provide the journal entry to record the machine on 1 January 20X6. Use the net method to record the note payable.