Final answer:
The value recorded in the land account for Tesla's purchase is the present value of the future payment at the market interest rate plus the immediate payment, totaling $49,924. The interest recorded for the first year on the note is $4,992.
Step-by-step explanation:
The question from a student on how to compute the value recorded in the land account and how to compute the interest for the first year of a note involves understanding the present value of money and the amortization of notes. For the given situation where Tesla Corporation purchased land with a note that is non-interest-bearing but considered to have an implicit interest rate of 10%, the value recorded in the land account is the present value of the future payment of $44,800 given the 10% market interest rate.
To find out the value recorded in the land account and the interest recorded for the first year, we will use the present value formula. Applying the present value of a single future sum, the calculation would be as follows:
Present Value (PV) = Future Value (FV) / (1 + i)^n, where i is the interest rate and n is the number of periods.
For the land payment, PV = $44,800 / (1 + 0.10)^3
= $33,924 (rounded to the nearest whole dollar).
Add the $16,000 initial payment to the present value computed to get the recorded land value:
$16,000 + $33,924 = $49,924.
The interest for the first year is calculated based on the initial value recorded for the land. Assuming this value represents the principal, the interest for the first year will be:
Interest Year 1 = Principal * interest rate
= $49,924 * 0.10
= $4,992 (rounded to the nearest whole dollar).