Question
Waterway Industries, a company who maintains its accounting records using IFRS, manufactures furniture. Waterway sells an order to Save-A Lot Furniture in exchange for a
Waterway Industries, a company who maintains its accounting records using IFRS, manufactures furniture. Waterway sells an order to Save-A Lot Furniture in exchange for a zero-interest-bearing $100000 note due from the customer in two years. Since there is no stated interest rate on the note, the controller uses the current market rate of 12% to derive the present value. Based on this information and the incorporation of the time value of money, which of the following would be recorded by Waterway to recognize this sale?
A credit to Notes Receivable for $79719.
A credit to Sales Revenue for $100000.
A debit to Discount on Notes Receivable for $12000.
A debit to Notes Receivable for $79719.
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Financial Accounting Theory
Authors: William R. Scott
7th edition
132984660, 978-0132984669
