Question
On January 1, 2018, Tustumena Company purchased a used tractor. Tustumena paid $4,000 down and signed a noninterest-bearing note requiring $20,000 to be paid on
On January 1, 2018, Tustumena Company purchased a used tractor. Tustumena paid $4,000 down and signed a noninterest-bearing note requiring $20,000 to be paid on December 31, 2020. The fair value of the tractor is not determinable. An interest rate of 5% properly reflects the time value of money for this type of loan agreement. The company's fiscal year-end is December 31.
Question
Interest expense for 2019 would be:
| $1,000 | ||
| $1,117 | ||
| $864 | ||
| $907 |
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Internal Auditing: Principles And Techniques
Authors: Richard L. Ratliff, W. Wallace, Walter B. Mcfarland, J. Loeboecke
1st Edition
0894131672, 978-0894131677
