On January 1, Harrison Corp. sold used vehicles with a cost of $78,000 and a carrying amount of $12,600 to Aberdeen Ltd. in exchange for a $18,000, four-year non-interestbearing note receivable. The market rate of interest for a note of similar risk is 7.5%. Harrison follows IFRS and has a year-end of December 31.
Required:
a. Prepare the entries to record the sale of equipment in exchange for the note, the interest for the first year, and the collection of the note at maturity.
b. Prepare the interest entry for the first year assuming that Harrison follows ASPE and uses the straight-line method for interest.
