On 1 December, Year 1, Bradley Corporation incurs a 15-year $200 million mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of $2.4 million, which include interest computed at the rate of 12% per year. The first monthly payment is made on 31 December, Year 1.
-The total liability related to this mortgage reported in Bradley's statement of financial position at 31 December, Year 1, is:

Question

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The total liability reported is the principal amount of the mortgage minus the principal portion of the first payment. The first payment includes interest for one month, calculated as $200 million * (12% / 12) = $2 million. The principal portion of the first payment is $2.4 million - $2 million = $0.4 million. Therefore, the liability is $200 million - $0.4 million = $199.6 million.

On 1 December, Year 1, Bradley Corporation Incurs a 15-Year