Question
1. On January 1, 2020, Rock Co. sold machinery with historical cost of P5,000,000 and accumulated depreciation of P1,900,000 in exchange for a 3-year, 3%,
1. On January 1, 2020, Rock Co. sold machinery with historical cost of P5,000,000 and accumulated depreciation of P1,900,000 in exchange for a 3-year, 3%, P3,000,000 note receivable. Principal is due January 1, 2023 but interests are due annually every December 31. The prevailing interest rate for this type of note is 12%. How much is the present value of the note to be recorded on January 1, 2020?
2. Using the same information in Problem 5, how much is the interest income in 2022?
3. Using the same information in Problem 5, except that the interest is payable semiannually on June 30 and December 31, how much is the interest income in 2022?
PROVIDE SOLUTIONS
Problem 5 On January 1, 2020, Rock Co. sold machinery with historical cost of P5,000,000 and accumulated depreciation of P1,900,000 in exchange for a 3-year, 3%, P3,000,000 note receivable. Principal is due January 1, 2023 but interests are due annually every December 31. The prevailing interest rate for this type of note is 12%. How much is the present value of the note to be recorded on January 1, 2020? O P2,336,161.22 P2,351,505.56Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Introductory Accounting Finance And Auditing For Lawyers
Authors: Lawrence A. Cunningham
5th Edition
0314912606, 978-0314912602
