34. The current portion of long-term notes receivable as at December 31, 2021 is
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:31. Vigan Corporation included the following in its notes receivable as at December 31, 2021:
Note receivable from sale of land
P
880,000
1,200,000
Note receivable from consultation
Note receivable from sale of
equipment
1,600,000
In connection with your audit, you were able to gather the following transactions during 2021 and other information
pertaining to the company's notes receivable:
a. On January 1, 2021, Vigan Corporation sold a tract of land. The land was purchased 10 years ago was carried on
Vigan's Corporation's books at a value of P 500,000. Vigan received a noninterest bearing note for P 880,000. The note
is due on December 31, 2022. There is no readily available market value for the land but the current market rate of
interest for comparable notes is 10%.
b. On January 1, 2021, Vigan Corporation finished consultation services and accepted in exchange of a promissory note
with a face value of P 1,200,000, a due date of December 31, 2023 and a stated rate of 5% with interest receivable at the
end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under
this circumstances, the note is considered to have an appropriate imputed rate of interest of 10%.
c. On January 1, 2021, Vigan Corporation sold equipment with a carrying amount of P 1,600,000 to Y Company. As
payment, Y gave Vigan Corporation a P 2,400,000 note. The note bears an interest rate of 4% and is to be repaid in three
annual installments of P 800,000 (plus interest on the outstanding balance) The first payment was received on December
Show Transcribed Text
C
34. The current portion of long-term notes receivable as at December 31, 2021 is
A. P 1,468,200
B. P 800,000
C. P 1,600,000
D. P 1,680,000
35. The interest income to be recognized in 2021 is
A. P 156,000
B. P 435,800
C. P 464,000
D. P 459,500
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