Deferred tax equal payment

The solution is 1 Jan 2017 Dr receivable 51868 Cr. Revenue. 50000 Cr. Deferred interest 1868 Dr Cash 12967 Cr receivable. 12967 1 Jul 2017 Dr Cash 12967 Cr receivable. 12967 31 Dec 2017 Dr deferred interest 926 Cr interest income 926 Thanks in advance.

Miley, where's this question from? I don't recognise the name

Hi sir, It is just my course assignment, but I cannot remember equal payment, this kind of solution when I learnt F7.

Right - first things first - this is NOT a deferred tax question as the heading suggests It's more a leasing question or a purchase by deferred payment question I have tried to tackle the question with logic (sadly lacking, unfortunately) and I've tried to solve it with the use of 'x's algebraically, but that got exceedingly complicated Eventually I turned to my Excel spreadsheet, set up the appropriate table, and tried a 6 monthly payment of $12,600 This left me with an 'extra' amount of $1,522.83 at the end of the period, so I changed the payment to $12,700 This left an 'extra' amount of $1,107.58 A change of $100 payment led to a fall of $1,522.83 - $1,107.58 = a fall of $415,25 and I needed to make the figure fall by a further $1,107.58 Applying the principles of extrapolation, this indicated that the payment needed to increase by 2.667261 * $100 so I then tried $12,700 + $266.73 = $12,966.73 and, lo and behold, there was no amount left over after the fourth payment Start with $50,000, deduct $12,966.73, add on interest at 5% for 6 months, deduct $12,966.73, add on interest at 5% for 6 months, deduct $12,966.73, add on interest at 5% for 6 months, deduct $12,966.73 and there's your answer The interest calculations bring figures of $925.83, $624.81 and $316.26 and that represents a total of $1,866.90 OK?

Thank you very much.

You're welcome

Miley - I sent the question to John Moffat (F2, F5, F9, P4) on Opentuition and here's part of his response: "you get the equal annual amount by dividing the 50,000 by the annuity factor for the number of periods at the interest rate per period. So if the first payment is in 1 years time, then you would divide by the annuity factor for 4 periods at the interest rate per period. In fact, since the first payment is immediate, you would add 1 to the annuity factor, and then divide by the total. The interest rate per period (i.e. six months) is strictly (the square root of 1.05) -1 = 0.0247 (or 2.47%) although I am sure they would accept 2.5%." Better?