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7. On January 1, 2016, DC Company sold land costing P850,000 and received in exchange a four year note with a face amount of P1,300,000 bearing a rate of 19% which approximates the current interest rate in the market. DC Company uses the calendar year for reporting purposes. 1. Gain on sale of the land is? 2. Carrying value of the note in December 31, 2016? 3. Interest income for 2017? 8. On October 1, 2016, Marvel Company sold land costing P3,000,000 and received in exchange a note with face amount of P4,250,000 and a maturity date of October 1, 2021. It bears an interest rate of 8% which approximates the current interest rates in the market. Marvel Company uses the calendar year for reporting purposes Selling price of the land? Note receivable amount reported in the current section of the 2016 statement of financial position? 3. Interest income to be reported in 2017? 9. On August 1, 2016, Superman Company sold an equipment with a carrying amount of P750,000 and received as payment a 9% 1,000,000 face value note. Equal principal payments plus interest are due every August 1, from 2017 to 2020. The first principal payment was made on August 1, 2017. Superman Company uses the calendar year for reporting purposes. 1. Gain or loss on the sale of equipment? 2. 3 . Interest income for 2017? Carrying value of the notes receivable account on December 31, 2017? 10. Captain America sold an equipment on January 2, 2016. The agreed price was P3,000,000. A P1,000,000 down payment was received, and Captain America Company accepted a mortgage note for the balance. The note shall carry a 10% rate of interest (computed on the unpaid balance) for 5-year period. Equal payments are to be made at the end of each year beginning December 31, 2016. Captain America Company's accounting period ends on December 31. 1. Annual collection? WN Interest income for 2016? Notes receivable reported in the current section of the December 31, 2017 statement of financial position.? 11. On April 1, 2016, Batman Company sold a merchandise to Bruce Enterprises in exchange for a P525,000 non-interest bearing note due on April 1, 2020. There was no established exchange price for the equipment and the note has no ready market. The prevailing rate of interest for a note of this type at April 1, 2016 was 12%. The equipment had a carrying value of P170,000 at the time of sale. The collection of the note from Bruce Enterprises is reasonably assured. Batman Company uses calendar year for reporting purposes. 1. Initial measurement of the notes receivable? 2. Interest income for 2017? 3. Unearned interest at December 31, 2018?12. Ch January 1, 2016, Iron Man Company sold a parcel of land which it has acquired previously for P300,000 and received in exchange a noninterest bearing note whose face value amounted to P600000. The note shall be collected every December 31, as follows P200,000 in 2016; P300,000 in 201T; and P4003000 in 2013. The eective interest rate for a similar note was 6%. Iron Man Company uses calendar the calendar year for reporting purposes. 1. Gain or loss on the sale [if land? 2. Notes receivable reported in the noncurrent portion in the December 31, 2016 statement of nancial position? 3. Interest income for 2013? 13. On January 1, 2016, Flash Company sold used equiprnentto Barry Company and received a noninterest beanng note requiring payment of P40,000 annually for 3 years. The rst payment is due on December 31 , 2016 and the prevailing rate of interest for this type of note at date of issuance was 3%. The equipments carrying amount on January 1, 2016 was P136000. Flash uses calendar the calendar year for reporting purposes. 1. The gain or loss on the sale ofthe equipment is? 2. The amount credited to notes receivable account to record the collecbon on December 31, 2016? 3. Interest income for 2013'? 14. On January 1, 2016, Thor Company sold Asgard Company goods costing P110,000 and received a note having a face amount of P250000. The note requires Asgard Company, the buyer to pay ve equal annual instalment starting January 1 , 2016. No interest rate was stipulated in the note. A note of a similar characteristic would hear a market rate of 3%. Collection of the note is reasonably assured. Thor Company uses calendar the calendar year for reporting purposes. 1. Initial recording to notes receivable on January 1, 2016? 2. Interest income for 201?? 16. On January 1, 2016, Aqua Man Company sold goods costing P2T5,000 to Atlantis Ccrnpany. As payment, Atlantis Company gave Aqua Man Company a PT00,000 face value note. The note bears an interest rate of 4% and shall be repaid in 4 annual instalments of P126000, plus interest based on the outstanding balance. The rst payment is due on December 31, 2016. The market price of the land is not reliably determinable. Prevailing interest rate for a note of this type is 12% 1. Amount recorded as sales? 2. Interest income for 201
