COC

On January 1, 2021, CPA Company sold equipment with a carrying amount of P4,800,000 in exchange for P6,000,000 noninterest bearing note due January 1, 2024. There was no established exchange price for the equipment. The prevailing interest rate for this note was 10%. The present value of 1 at 10% for three periods is 0.75. What amount should be reported as gain or loss on sale of equipment?

a.1,200,000 gain

b.2,700,0 00 gain

c.300,000 gain

d.300,000 loss

What amount should be reported as interest income for 2021?

a.90,000

b.450,000

c.600,000

d.500,000