On January 1, 2018, Karen Company acquired equipment by issuing a 2-year non-interest bearing note amounting to Php 1,000,000. The prevailing interest rate of the note is 12%.

Required: Based on the above facts, answer the following:

1. Assuming the equipment has a cash price equivalent of Php 800,000, how much is the cost of the equipment?

2.Assuming the equipment has no cash price equivalent, how much is the cost of the equipment?