Question
On January 1, 2007, Sandstone Corporation sold a building that cost $250,000 and had accumulated depreciation of $100,000 on the date of sale. A $300,000
On January 1, 2007, Sandstone Corporation sold a building that cost $250,000 and had accumulated depreciation of $100,000 on the date of sale. A $300,000 non-interest-bearing note due on January 1, 2013 was received as consideration. The prevailing rate of interest for a note of this type on January 1, 2007 was 11%. At what amount should the gain from the sale of the building be reported?
On January 1, 2001, Sandstone Corporation purchased $200,000 face value, 9%, 10-year bonds of Walters Inc. The bonds mature on January 1, 2011, and pay interest annually beginning January 1, 2002. The market rate of interest is 11%. How much did Sandstone pay for the bonds?
Sandstone Corporation brought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assume an 11% market rate of interest applies to this contract, how much was recorded as the cost of the machine?
Sandstone Corporation purchased a special tractor on December 31, 2013. The purchase agreement stipulated that Sandstone should pay $20,000 at the time of purchase and $5,000 at the end of each of the next 8 years. The tractor should be recorded on December 31, 2013, at what amount, assuming the market rate of interest was 11%?
Sandstone Corporation wants to withdraw $100,000 from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%?
Period |
Present Value of $1 (Table 6-2) |
Present Value of an Ordinary Annuity of $1 (Table 6-4) |
6 | .53464 | 4.23054 |
7 | .48166 | 4.71220 |
8 | .43393 | 5.14612 |
9 | .39092 | 5.53705 |
10 | .35218 | 5.88923 |
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