Problem 13On January 1, 2020, Magbaril Company sold equipment with a carrying amount of P800,000 toMacud Company. As payment, Macud gave Magbaril Company a P1,200,000 note. The notebears an interest rate of 5% and is to be repaid in three annual installments of P400,000 (plusinterest on the outstanding balance). The first payment was received on December 31, 2020.The prevailing rate of interest for a note of this type at January 1 was 10% and 9% onDecember 31.15. The gain on sale of equipment is16. The interest income to be recognized in 2021 is

Answer carrying amount of equipment = P800,000 Sale Value of equipment = P1,200,000 Calculation of…

Answered: 15. The gain on sale of equipment is…

Business

Accounting

15. The gain on sale of equipment is 16. The interest income to be recognized in 2021 is

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 13
On January 1, 2020, Magbaril Company sold equipment with a carrying amount of P800,000 to
Macud Company. As payment, Macud gave Magbaril Company a P1,200,000 note. The note
bears an interest rate of 5% and is to be repaid in three annual installments of P400,000 (plus
interest on the outstanding balance). The first payment was received on December 31, 2020.
The prevailing rate of interest for a note of this type at January 1 was 10% and 9% on
December 31.
15. The gain on sale of equipment is
16. The interest income to be recognized in 2021 is

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