Sunland Industries Corp. purchased the following assets and also constructed a building. All this was done during the current year using a variety of financing alternatives. Assets 1 and 2 These assets were purchased together for $113,000 cash. The following information was gathered: Depreciation Initial Cost on to Date on Book Value on Appraised Description Seller's Books Seller's Books Seller's Books Value Machinery $123,000 $57,000 $66,000 $96,000 Equipment 64,000 10,000 54,000 32,000 Asset 3 This machine was acquired by making a $10,800 down payment and issuing a $30,700, two-year, zero-interest-bearing note. The note is to be paid off in two $15,350 Instalments made at the end of the first and second years. It was determined that the asset could have been purchased outright for $34,800. Asset 4 A truck was acquired by trading in an older truck that has the same value in use. The newer truck has options that will make it more comfortable for the driver, however, the company remains in the same economic position after the exchange as before. Facts concerning the trade-in are as follows: Cost of truck traded Accumulated depreciation to date of exchange Fair market value of truck traded Cash paid by Sunland Fair market value of truck acquired $104.000 38,000 86,000 10.800 76,000 Assets Equipment was acquired by issuing 130 common shares. The shares are actively traded and had a closing market price a few days before the equipment was acquired of $10 per share. Alternatively, the equipment could have been purchased for a cash price of $1,275. Construction of Building A building was constructed on land that was purchased January 1 at a cost of $145,000. Construction began on February 1 and was completed November 1. The payments to the contractor were as follows: Date Payment Date Feb. 1 BE Payment $110,000 348,000 June 1 Sept. 1 Nov. 1 480,000 104,000 To finance construction of the building, a $595,000, 12% construction loan was taken out on February 1. At the beginning of the project, Sunland invested the portion of the construction loan that was not yet expended and earned Investment income of $4,400. The loan was repald on November 1 when the construction was completed. The firm had $201.000 of other outstanding debt during the year at a borrowing rate of 10% and a $198,000 loan payable outstanding at a borrowing rate of 6%. Sunland uses a variety of alternatives to finance its acquisitions. Record the acquisition of each of these assets, assuming that Sunland prepares financial statements in accordance with IFRS. Use the net amount to record the note. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts. Round capitalization rate to 2 decimal places. e.g. 52.75% and final answers to o decimal places. e.. 5.275.) Debit Credit Account Titles and Explanation Acquisition of Assets 1 and 2 Machinery 74326 Equipment 38674 Cash 113,00 Acquisition of Asset 3 Acquisition of Asset 4 Acquisition of Asset 4 Acquisition of Asset 5 Construction of Building eTextbook and Media What was the effective interest rate used in negotiating the note payable used to acquire the machinery in Asset 3? Use Excel or a financial calculator to arrive at your answer. (Round final answer to 3 decimal places, e.g. 1.234%) Effective interest rate % eTextbook and Media Save for Later Attempts: 0 of 3 used Submit