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Unformatted text preview: Change In New Interest Cash Carrying Carrying Revenue* Collection Amount** Amount*** *Market interest rate times previous carrying amount **Interest revenue – Cash collection ***Old carrying amount plus the change Example: ABC Company sold equipment and the seller gave ABC a three-year note with annual payments of $100,000. First payment one year after purchase and the market interest rate is 10%. Sales price = Note receivable amount = (PVa, n=3, i=10%)(100,000) = $248,685. Financial Asset Compound Interest Table Change In New Period/ Interest Cash Carrying Carrying Time Revenue Collection Amount Amount 248,685 1 24,869 100,000-75,131 173,554 2 17,355 100,000-82,645 90,909 3 9,091 100,000-9,909 zero...
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- Spring '08