Numbers 16-17

On January 1, 2022, Hotel Company sold machinery with

historical cost of P3,000,000 and accumulated depreciation of

P900,000 in exchange for a 3-year, P2,100,000 noninterestbearing

note receivable due in equal semi-annual payments

every July 1 and December 31 starting on July 1, 2022.

The prevailing rate of interest for this type of note is 10%.

Information on present value factors is as follows:

Periods

PV of

1 at 5%

PV of annuity of

1 at 5%

3 0.8638 2.7235

6 0.7462 5.0757

16) How much is the interest income in 2022?

a. 88,825 c. 128,964

b. 177,649 d. 164,591

17) How much is the carrying amount of the receivable on

December 31, 2022?

a. 1,241,086 c. 1,690,059

b. 982,381 d. 1,594,396

Noninterest Bearing - Serial Notes, Annual, Paid in Advance

Numbers 14 and 15

On March 1, 2020, Namami Company sold goods to Zomiso

Company. Zomiso singed a non-interest bearing note requiring

payment of P60,000 annually for seven years. The first payment

was made on March 1, 2020.

The prevailing interest for this type of note at the date of

issuance was 10%. Information on present value factors is as

follows:

Periods Present value of 1 at

10%

PV of annuity of 1 at

10%

6 0.56 4.36

7 0.51 4.87

18) How much should be reported as sales revenue on March 1,

2020?

a. 420,000 c. 261,600

b. 321,600 d. 292,200

19) What is the amount of interest income for the year 2020?

a. 30,000 c. 26,800

b. 26,160 d. 21,800

Interest Bearing With Unrealistic Nominal - Term Note N/R

Numbers 20-23

On December 31, 2020, You Bring Out The Best In Me Like No

One Else Can Do Company finished consultation services and

accepted in exchange a promissory note with a face value of

P200,000, due date of December 31, 2023, and a stated rate of

5%, with interest receivable at the end of each year.

The fair value of the services is not readily determinable and the

note is not readily marketable. Under the circumstances, the

note is considered to have an appropriate imputed rate of

interest of 10%. The following interest factors are provided:

Table factors for

three periods

5% 10%

Future value of 1 1.15763 1.33100

Present value of 1 0.86384 0.75132

Future value of

ordinary annuity

3.15250 3.31000

Present value of

ordinary annuity

2.72325 2.48685

20) What is the amount of consultation service revenue to be

present in the company's income statement?

a. 175,133 c. 150,264

b. 24,869 d. 200,000

21) What is the amount of interest income for the year 2021?

a. 17,513 c. 20,000

b. 10,000 d. 7,513

22) What is the carrying value of notes as of December 31,

2022?

a. 190,909 c. 175,133

b. 182,645 d. 200,000

23) What is the current and non current portion of the notes

receivable as of December 31, 2022?

Current portion Non current portion

a. 190,909 9,091

b. 200,000 9,091

c. 190,909 0

d. 200,000 0

24) What of the following items is not matched correctly with

its basis of valuation for purposes of reporting on the

statement of financial position?

a. Investment in trading securities -> fair value

b. Long-term interest note with unrealistic rates -> face

value

c. Inventories of broker traders -> fair value less cost to

sell

d. Bearer plant -> cost less accumulated depreciation and

accumulated impairment loss

Interest Bearing with Unrealistic Nominal - Serial Note N/R

25) The balance sheet of CPAR Reserve Your Seat Now!

Company reported the following long-term receivable as of

December 31, 2020:

Note receivable form sale of plant 4,500,000

Note receivable from officer 1,200,000

The following are transactions during 2021 and other

information pertaining to the company's long term

receivables:

a. The note receivable form sale of plant bears interest

at 12% per annum. The note is payable in 3 annual

installments of P1,500,000 plus interest on the

unpaid balance every April 1. The initial principal

and interest payment was made on April 1, 2021

b. The note receivable from officer is dated December

31, 2020, earns interest at 10% per annum, and is

due on December 31, 2021. The 2021 interest was

received on December 31, 2021

What is the accrued interest receivable as of December

31, 2021?

a. 385,500 c. 270,000

b. 428,538 d. 505,500

Numbers 26-30

On January 1, 2022, Stain Company sold a delivery equipment

costing P1,000,000 with accumulated depreciation of P150,000

in exchange of a three year, 10%, P1,800,000 interest bearing

note. The note is collectible in equal annual amount starting

December 31, 2022 including interest.

The prevailing rate of interest of similar note on this date was at

12%. The following interest factors are provided:

Periods Present value of 1 at

12%

PV of annuity of 1 at

12%

1 0.893 0.893

2 0.797 1.690

3 0.712 2.402

26) How much is the gain or loss on sale of equipment?

a. 740,500 c. 1,131,150

b. 890,300 d. 800,000

27) How much is the interest income in 2022?

a. 198,194 c. 208,836

b. 174,030 d. 180,000

28) How much is the carrying amount of the note on December

31, 2022?

a. 1,349,136 c. 1,200,000

b. 1,769,136 d. 1,169,136

29) How much is the current portion of the note on December

31, 2022?

a. 639,704 c. 589,432

b. 579,704 d. 600,000

30) How much is the noncurrent portion of the note on

December 31, 2022?

a. 529,244 c. 589,244