15) Explain how non-current liabilities are measured after initial recognition. 16) On May 1, 2012, Sea Escape Ltd. purchases a new automobile for $18,000 from the dealer who provides the financing....

15) Explain how non-current liabilities are measured after initial recognition.

16) On May 1, 2012, Sea Escape Ltd. purchases a new automobile for $18,000 from the dealer who provides the financing. The three-year, interest-free loan is repayable at $500 per month. The market rate of interest for similar transactions is 0.25% per month.

Requirement:

Prepare journal entries to record:

a. the purchase of the automobile.

b. the accrual of interest and the loan payment at the end of May 2012.