Discover how IDNLearn.com can help you find the answers you need quickly and easily. Whether your question is simple or complex, our community is here to provide detailed and trustworthy answers quickly and effectively.

On January 2, 2022, McClelland Company purchased a machine and signed a noninterest-bearing note in payment. The note matures in 4 years and requires McClelland to pay $70,000 at maturity. McClelland also had the option to purchase the the machine in cash from a different vendor for $56,505. At what amount should the machine be recorded upon purchase

Sagot :

The amount that McClelland Company should record the machine upon purchase is $56,505.

Recording the transaction

The proper way to record the transaction based on U.S. GAAP polices is to debit the Machine account with the price of $56,505 as this represents the market value of the machine.

The company should also credit the Notes payable account with $70,000 being the value of the note acquired. A debit will go to the Discount on Note account for $13,495 which is the difference between the note and value of machine.

Find out more on recording Notes Payable at https://brainly.com/question/17073934.