On December 31, Year 7 X Equipment Company receives a 3 year $90,000 zero interest bearing note plus cash of $15,000 in payment for equipment sold. Company uses perpetual inventory system and paid $45,000 for the equipment. The present value of the note represents a true cost of borrowing of 11%. The note will be repaid in 3 equal yearly payments beginning December 31, Year 8. Company reports using IFRS.

Required

a) Calculate the present value of the note (2 marks)

b) Provide the journal entries to record the issue of the note (4 marks)

c) Provide the journal entries to record the receipt of all yearly payments (6 marks)