On January 1,20A,Goldstein Company purchased a machine.The seller agreed that a total of $9,000 would be paid over a three-year period--$3,000 per year at the end of 20A,20B,and 20C.At the time the machine was purchased,the market rate of interest was 10%.What amount should be debited to the asset account,Machinery,on the date of purchase (round to the nearest dollar)?

Question

Quizplus · Accepted Answer

The present value of the payments should be calculated using the market rate of interest. The present value of $3,000 payments over three years at a 10% interest rate is approximately $7,461.

On January 1,20A,Goldstein Company Purchased a Machine