On 1 January 20X1, the distributor Brenta acquires an exclusive licence to distribute a range of cosmetics, payable in a single instalment, 330,750, on 31 December 20X2, well beyond normal credit terms. The cash price equivalent is 300,000; Brenta calculates interest at the implicit rate of 5 % on the outstanding liability. Record the acquisition entry (E1) and the entry at 31 December 20X1 (E2).
- Cash price equivalent
- 300,000
- Single payment on 31 December 20X2
- 330,750
- Implicit rate
- 5 %