4)ABC Corporation sold its machine with a carrying amount of P2,000,000 in exchange for P2,500,000 non-interest-bearing note that requires five annual payments of P500,000 starting on January 1, 2022.

The market interest for similar notes was 10% and the relevant present value factors are:

Present value of a single payment at 10% for 5 periods 0.621

Present value of an ordinary annuity of 1 at 10% for 5 periods 3.791

Present value of an annuity due of 1 at 10% for 5 periods 4.170

1. How much is the carrying amount of the notes on December 31, 2022?

A. 2,082,050

B. 2,000,000

C. 1,585,050

D. 1,743,500

2) What is the interest income for the year 2022?

A. 158,500

B. 379,100

C. 139,550

D. 189,550

3) How much is the gain or loss on the sale of the machine?

A. 85,000 gain

B. 85,000 loss

C. 104,500 gain