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Question: Adventureland Incorporated purchased metal to build


Adventureland Incorporated purchased metal to build a new roller coaster on December 31, 2017. Adventureland provided a $500,000 down payment and agreed to pay the balance in equal instalments of $200,000 every December 31 for five years. Adventureland could have received a loan from the bank for this amount at 9% interest. Adventureland prepares financial statements in accordance with IFRS.

Instructions:
(a) Using time value of money tables, a financial calculator, and computer spreadsheet functions, prepare the journal entries that would be recorded for the purchase and for the payments and interest on December 31, 2017, 2018, 2019, 2020, 2021, and 2022.
(b) From the lender’s perspective, what are the advantages of an instalment note compared with an interest-bearing note?


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