The Electric Company buys machinery for $$500,000$ and gives a promissory note to pay dated $2$ years from the purchase date. Interest at $10\%$ and principal are to be repaid at maturity. The life of the asset is also estimated to be two years with no salvage and straight line depreciation is used. We can say that on the purchase date:

Multiple Choice

The amount shown for the asset on the balance sheet will be the same as the amount shown for the liability

The amount shown for the asset on the balance sheet will differ than the amount shown for the liability

The liability will be offset from the asset but the total asset amount will increase by the amount of the discount amortization each period.

The liability will be offset from the asset until paid so initially the transaction will have no effect on total assets

None of the other alternatives are correct