Intermediate Accounting Practice
Intermediate Accounting Title — Accounting Practice (中级会计实务, China)
Fixed AssetsEnglish
Exam overviewPractice session
On January 1, 2024, Company M purchased a large specialized manufacturing machine with payment terms extending beyond normal credit terms (constituting a significant financing component). The total contract price is ¥5,000,000, payable in 5 equal annual installments of ¥1,000,000 on December 31 of each year from 2024 to 2028. The prevailing market discount rate is 6%. Present value annuity factor (P/A, 6%, 5) = 4.2124. Company M also paid non-refundable freight and installation expenses of ¥87,600 in cash. What is the initial cost of the fixed asset recorded on January 1, 2024?
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