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On January 1, 2017, Crown Company sold property to Leary Company. There was no established...

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Accounting

On January 1, 2017, Crown Company sold property to Leary Company. There was no established exchange price for the property, and Leary gave Crown a $4,000,000 zero-interest-bearing note payable in 5 equal annual installments of $800,000, with the first payment due December 31, 2017. The prevailing rate of interest for a note of this type is 9%. The present value of the note at 9% was $2,884,000 at January 1, 2017. Assuming that Leary has a calendar year end fiscal year, how much interest expense should Leary Company report for the year ended December 31, 2018 related to this note?

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