Show your solution clearly.

3. On January 1, 20x4, Melanie Co. sold a building, which had a carrying amount of P350,000, receiving a P125,000 down payment and, as additional consideration, a P400,000 noninterest bearing note due on January 1, 20x7. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type at January 1, 20x4, was 10%. What amount of interest income should be included in Melanie's 20x4 income statement? a. O b. 30,053 c. 35,053 d. 40,109 (AICPA - adapted)