On January 1, 2020 Lingayen Company sold equipment with a carrying amount of P7,000,000 in exchange for P9,000,000 noninterest-bearing note due January 1, 2023. There was no established exchange price for the equipment. The prevailing interest rate for this note on January 1, 2020 was 10%. The present value of 1 at 10% for three periods is 0.75.

1. In the 2020 statement of comprehensive income, what amount should be reported as gain or loss on sale of equipment?

A. 2,000,000 gain

B. 2,250,000 gain

C. 250,000 gain

D. 250,000 loss

1. In the 2020 statement of comprehensive income, what amount should be reported as interest income?

A. 675,000 B. 742,500 C. 832,500 D. 900,000