ABC Co. issued a 3-year non-interest bearing note in exchange of an equipment for P 1,000,000, which of the following is correct related to the recognition of the note? (market rate of interest for similar type of notes is 10%) The carrying value of the notes payable at the date of issuance is P 751,314.80. P 100,000 will be credited to discount on notes payable at initial recognition. The equipment account would be debited at the amount of P 1,000,000. P 248,685.20 will be credited to discount on notes payable at initial recognition

ABC Co. issued a 3-year non-interest bearing note in exchange of an equipment for P 1,000,000, which of the following is correct related to the recognition of the note? (market rate of interest for similar type of notes is 10%) The carrying value of the notes payable at the date of issuance is P 751,314.80. P 100,000 will be credited to discount on notes payable at initial recognition. The equipment account would be debited at the amount of P 1,000,000. P 248,685.20 will be credited to discount on notes payable at initial recognition

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 27E

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Concept explainers

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.

Question

If ABC Co. issued a 3-year non-interest bearing note in exchange of an equipment for P 1,000,000, which of the following is correct related to the recognition of the note? (market rate of interest for similar type of notes is 10%)

The carrying value of the notes payable at the date of issuance is P 751,314.80.

P 100,000 will be credited to discount on notes payable at initial recognition.

The equipment account would be debited at the amount of P 1,000,000.

P 248,685.20 will be credited to discount on notes payable at initial recognition.

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