Deefer Limited sold an item of machinery on 1 July 2014 on the following terms:
Initial payment of $25 000
Annual payments of $25 000 for 5 years (total $125 000).
The buyers incremental rate of interest is 7.5% and the present value of the future annual payments is $101 147.
At the time of sale of the machine Deefer would recognise revenue of:

Question

Quizplus · Accepted Answer

The revenue recognized at the time of sale is the sum of initial payment and present value of future payments. 
Initial Payment = $25,000
Present value of future payments = $101,147
Revenue recognized = $25,000 + $101,147 = $126,147. 
Therefore, choice C is the correct answer.

Deefer Limited Sold an Item of Machinery on 1 July