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On January 1, ABC Inc. sold used equipment with a cost of $14,500 and a...

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Accounting

On January 1, ABC Inc. sold used equipment with a cost of $14,500 and a carrying amount of $1,300 to XYZ Inc. in exchange for a $6,600, three-year noninterest-bearing note receivable. Although no interest was specified, the market rate for a loan of that risk would be 7%. Assume that Teal Mountain follows IFRS.

(a) Prepare the entry to record the sale of ABCs equipment and receipt of the note.

(b) Prepare the entries to record the recognition of interest each year.

(c) Prepare the entry to record the collection of the note at maturity.

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