Seneca Inc. sold and transferred a machine to a client on January 1, Year 1 for $583,200,
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Seneca Inc. sold and transferred a machine to a client on January 1, Year 1 for $583,200, which is due on December 31, Year 2. Other clients pay $500,000 upon delivery of the identical equipment at the beginning of the contract. Seneca's investment in the machine is $400,000. Due to the disparity between the consideration ($583,200) and the cash selling price ($500,000), Seneca found that the contract involves a substantial financing component.
The agreement has an implicit interest rate of 8%. record the journal entry.
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
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