Gerda Motors purchased custom-made machinery on January 1, 2018. The machinery had no known market value. Gerda agreed to pay $300,000 on December 31, 2020 and pay an additional 3% annually starting on December 31 each year. At the time, Gerda's typical borrowing rate was 7%.

A. What is the value of the machinery capitalized on the balance sheet on January 1, 2018? [ Select ]

B. How much interest expense is recognized on December 31, 2018? [ Select ]

C. What is the carrying value of the note on December 31, 2018?