LINK TO TEXT Fishbone Corporation purchased a special tractor on December 31, 20

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Fishbone Corporation purchased a special tractor on December 31, 2014. The purchase agreement stipulated that Fishbone should pay $22,310 at the time of purchase and $5,520 at the end of each of the next 8 years. The tractor should be recorded on December 31, 2014, at what amount, assuming an appropriate interest rate of 12%?(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

On January 1, 2014, Fishbone Corporation sold a building that cost $271,700 and that had accumulated depreciation of $104,200 on the date of sale. Fishbone received as consideration a $261,600 non-interest-bearing note due on January 1, 2017. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2014, was 11%. At what amount should the gain from the sale of the building be reported? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
The amount of gain should be reported

$

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Explanation / Answer

A )PV of 1 for 11 % at three years period (2017-2014) timing difference will be 0.73119 (1/(1+.11)^3)

Therefore PV= 0.73119 * 261600 = $ 191,279.30

Cost of the building = Cost - Accumulated Depreciation = 271700-104200

= $ 167,500

The gain reported will be = Consideration - Cost = 191279.30 - 167500 =$ 23779.30

B)

Years Interest PVAF Value 1 37400 0.89286 33392.85714 2 37400 0.79719 29815.05102 3 37400 0.71178 26620.58127 4 37400 0.63552 23768.37613 5 37400 0.56743 21221.76440 6 37400 0.50663 18948.00393 7 37400 0.45235 16917.86065 8 37400 0.40388 15105.23273 9 37400 0.36061 13486.81493 10 37400 0.32197 12041.79905 10 340000 0.32200 109480.00000 Fishbone must pay for the bonds    = 320798

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