James Halabi is a financial executive with Crane Company. Although James has not had any formal training in finance or accounting, he has a good sense for numbers and has helped the company grow from a very small company ($500,000 sales) to a large operation ($45 million is sales). With the business growing steadily, however, the company needs to make a number of difficult financial decisions in which James Halabi feels a little over his head. He therefore has decided to hire a new employee with numbers expertise to help him. As a basis for determining whom to employ, he has decided to ask each prospective employee to prepare answers to questions relating to situations he has encountered recently. The following are the facts for the second question asked of prospective employees. Last year the company exchanged a piece of land for a noninterestbearing note. The note is to be paid at the rate of $15,000 per year for nine years, beginning one year from the date of disposal of the land. An appropriate rate of interest for the note was 10% (market rate). At the time the land was originally purchased, it cost $90,000.

Part 1 Your answer is correct. Calculate the fair value of the note using IFRS 13 on the date of the exchange. Hint: discount the payments at the market rate of interest to find the present value of the note. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places, e.g. 5,275.) Fair value of the note under IFRS 13 $ 86385.36 Part 2 Prepare the journal entry for the exchange. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25.) Account Titles and Explanation Debit Credit