Question
Straight Industries purchased a large piece of equipment from Curvy Company on January 1, 2017. Straight Industries signed a note, agreeing to pay Curvy Company
Straight Industries purchased a large piece of equipment from Curvy Company on January 1, 2017. Straight Industries signed a note, agreeing to pay Curvy Company $430,000 for the equipment on December 31, 2019. The market rate of interest for similar notes was 8%. The present value of $430,000 discounted at 8% for three years is $341,348. On January 1, 2017, Straight recorded the purchase with a debit to equipment for $341,348 and a credit to notes payable for $341,348. On Straight Industries balance sheet for the year ended December 31, 2017, the book value of the liability for notes payable, including accrued interest would be closest to: $371,241 $368,656 $373,441 $375,748
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