Lester Corporation purchased equipment with a fair value of $150,000 on a 6 percent note.The note requires four end-of-year payments of $43,290.What would be the carrying value of the note immediately after the first payment.
A)$106,710
B)$115,710
C)$141,000
D)unable to determine from the information given

Question

Quizplus · Accepted Answer

The carrying value of the note immediately after the first payment can be calculated as follows:

Carrying value = Fair value of equipment - Total of payments made

First payment = $43,290
Total of payments made after first payment = $43,290
Remaining payments = 3

Carrying value = $150,000 - $43,290 = $106,710

Therefore, the answer is choice B) $115,710.

Lester Corporation Purchased Equipment with a Fair Value of $150,000