PROBLEM 4 The LOLITA Company included the following in its notes receivable as of December 31,2016? Note receivable from sale of land Note receivable from consultation Note receivable from sale of equipment P2,640,000 3,600,000 4,800,000 The following transaction during 2016 and other information relate to the company's notes receivable: a) On January 1, 2016, LOLITA Company sold a tract of land to Triple X Company. The land, purchased 10 years ago, was carries on LOLITA's books at P1,500,000. LOLITA received a noninterest-bearing note for P2,640 000 from Triple X. The note is due on December 31, 2017. There was no established exchange price for the land. The prevailing interest rate for this note on January 1, 2016, was 11%. b) On January 1, 2016, LOLITA Company received a 5%, P3,600,000 promissory note in exchange for the consultation services rendered. The note will mature on December 31, 2018, with interest receivable every December 31. The fair value of the services rendered is not readily determinable, the prevailing rate of interest for a note of this type was 10% on January 1, 2016. c) On January 1, 2016, LOLITA Company sold an old equipment with a carrying amount of P4,800,000 receiving P7,200,000 note. The note bears an interest rate of 4 % and is to be repaid in 3 annual installments of P2,400,000 (plus interest on the outstanding balance). LOLITA received the first payment on December 31, 2016. There is no established market value for the equipment. The market interest rate for similar notes was 14% on January 1, 2016. Note: Round off present value factors to four decimal places and final answers to the nearest hundred. 1. What amount of consultation fee revenue should be recognized in 2016? 2. What amount should be reported as gain on sale of equipment? 3. The amount to be reported as noncurrent notes receivable on December 31, 2016, is 4. The amount to be reported as current notes receivable on December 31, 2016, is 5. How much interest income should be recognized in 2016