On January 1, 2020, Allure Company sold an equipment with a carrying amount ofP800,000, receiving a noninterest bearing note due in three years with a faceamount of P1,000,000. There is to established market value for the equipment.The interest rate on similar obligations is 12%, The present value of 1 at 12% forthree periods is .712.What amount should be reported as interest income for 2020/A.288,000B.120,000C.96,000D.85,440

Solution: Present value of note = 712,000 Interest rate = 12% Interest income = 712,000 x 12%…

amount of P1,000,000. There is to established market value The interest rate on similar obligations is 12%, The present va three periods is .712. What amount should be reported as interest income for 202 O A.288,000 B.120,000 O C.96,000 O D.85,440

amount of P1,000,000. There is to established market value The interest rate on similar obligations is 12%, The present va three periods is .712. What amount should be reported as interest income for 202 O A.288,000 B.120,000 O C.96,000 O D.85,440

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Assuming a 360-day year, when a $11,918, 90-day, 10% interest-bearing note payable matures, total…

A: A note payable is a written promissory note. Under this agreement, a borrower borrows a specific…

Q: Which of the following compounding rates is equivalent to an effective interest rate of 2.75% p.a.…

A: The effective interest rate also referred to as the annual equivalent rate or the effective rate is…

Q: Direction: Find the compound interest and the maturity value in each of the following cases: Given:…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: Nhat compound interest rate j, is equivalent over 11-year period to a compound interest rate of…

A: The future value of a lump sum: The value of an amount invested today, at a given rate of interest,…

Q: 16. What annual rate r compounded continuously is equivalent to a nominal rate of 6% compounded…

A: We first need to determine the effective annual rate of semiannual compounding by using the formula…

Q: 10. Compute for the missing values in the table. Principal (P) 25,000 70,000 120,000 Time Nominal…

A: Here; i= perodic interest rate n= number of periods m = compounding periods in a year

Q: what is the nominal rate of interest compounded continuously for 8 years if the present worth factor…

A: Continuous Compounding N = 8 Present Value factor = 1.7506725

Q: A bank quotes an interest rate of 5% per year with quarterly compounding. What is the equivalent…

A: The effective interest rate is the true cost of borrowing, taking into account the compounding of…

Q: Compare the annual payments calculated and potential risks or benefits involved for a foreign…

A: Data given : Interest rate at 5%, 12% and 15%. Assumption : Exchange rate remains unchanged during…

Q: What nominal rate of interest compounded semi-annually can be used instead of 10 % comp. monthly…

A: We need to determine the effective annual rate that would equal the 2 compounding methods. The…

Q: Q7-3. If interest is compounded more than once a year, will the effective interest rate be higher…

A: Let the nominal interest rate = r Compounding frequency = m

Q: Complete the following using present value.

A: Time value of money (TVM) means the amount of money received in the present period will have more…

Q: 70. The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable…

A: Effective annual rate is computed after taking into account all the compounding due in a year.

Q: Calculate the nominal rate of interest per annum convertible half-yearly that is equivalent to: (i)…

A: The effective annual rate (EAR), also known as the annual equivalent rate (AER), is the interest…

Q: Task 1B: Amortization Table for Option B Loan Amount, P = 24 430,000.00 Amortization Payment, Rg =…

A: We need to use excel NPER formula to calculate number of quarterly payment used to amortize loan.…

Q: Finding the Interest Rate per Compound Period Principal Future Value Term Interest Interest Rate per…

A: Principal (P) = P 50,000 Future value (F) = P 114,860 Term = 2.5 Years Number of compounding periods…

Q: What is the equivalent effective rate of interest compounded quarterly if the ne is 19.5%? O 20.97%

A: Effective rate is interest rate after considering the effect of the compounding and while nominal…

Q: Question A Suppose the annualized LIBOR3 is 4.23% and the annualized LIBOR6 is 5.97%. What is the…

A: As per the given information:The forward rate for a LIBOR3 (annualized) deposit is to be placed…

Q: Estimate the compound interest along with principal payable in second year when amount of loan is…

A: Given values : Principal = $ 10000 Interest rate = 8 % Time period = 2 years Compound interest.

Q: Determine the interest rate per year, compounded quarterly, which is needed for a principal amount…

A: Given Present value (PV) = OMR 27000 Future value (FV) = OMR 43995.75 Period = 8 years Interest…

Q: Q6. A debt of $ 5700 is due, with interest at a = 8% in three years. It is agreed that the loan will…

A: Loan is a value which is borrowed from other sources for a particular time and person have to repay…

Q: Parts aâ€“c for each of the following cases. Answer parts aâ€“c for each of the following cases.…

A: Future value (FV) is the value of a current asset at a future date based on an assumed rate of…

Q: each month for 2n mc Lrengid Find n

A: Monthly interest rate is 24% =0.24= 0.2 Time period of the loan =2n months Need to calculate n…

Q: Annual interest rate Investment period (Years) Compounding periods Payment per compounding period…

A: Present value of a stream of cash flow is calculated by using the annuity formula. Data given:…

Q: P10,000 IS BORROWED FOR 75 DAYS AT 20% PER ANNUM SIMPLE INTEREST. HOW MUCH WILL BE DUE AT THE END OF…

A: Simple interest is a method of interest calculation where principal amount is multiply with time and…

Q: (ii) (iii) Calculate the effective annual rate of interest that is equivalent to an effective rate…

A: The effective annual rate (EAR), also known as the annual equivalent rate (AER), is the interest…

Q: What is the FV of a RO 800, 6-year loan with 2% monthly compound interest? a. All options are…

A: Using excel FV function

Q: How much amount should an investor deposit in an account earning a continuously compounded interest…

A: Time Value of Money states that a dollar today is worth more than anytime in the future. This is…

Q: Which of the following compounding rates is equivalent to an effective interest rate of 2.75% p.a.?

A: When the compounding frequency per year is not 1 then in that case the stated interest rate will not…

Q: 4) Fill in the blanks. Principal Rate (%) Time (Days) 58 Ordinary Interest Exact Interest P45,000…

A: A debt amount is a loan that is borrowed by one person from another person. It must be repaid within…

Q: Sam Long anticipates he will need approximately $226,800 in 15 years to cover his 3-year-old…

A: Present value refers to the current worth of the amount for the future expected cash flows at given…

Q: 1. The semiannual interest rate equivalent to an effective monthly rate of 0.90% is equal to_ 2.…

A: In this problem we have to calculate effective interest rate and nominal interest rate.

Q: At what interest rate wil the given principal P earn the given simple interest l'in the given term…

A: P = Principal I = Interest t = Term Let r = Simple interest rate

Q: 10.Which of the following is an example of an effective interest rate? Group of answer choices a.6%…

A: Answer The effective interest rate means the rate of interest which actually earn per year

Q: (15) 00 (11) quarterly (12) (13) 6. (14) 8,8 Semi- D00 11% (16) (17) (18) (19) 10,000 (2 annually…

A: More is the compounding more is the effective interest rate and hence future value increases with…

Q: he present value of $5,000 payable in 150 days at 8.5% per annum simple interest is: Select one: a.…

A: Present Value under Simple Interest = Future Value /[ 1 + {Interest rate * n}]

Q: The effective annual interest rate, jl, equivalent to j26 = 17.80% p.a. is: O 1) 19.418 02) 8.90% 3)…

A: The effective annual interest rate is a crucial concept in finance that is used to describe the true…

Q: P10,000 IS BORROWED FOR 75 DAYS AT 20% PER ANNUM SIMPLE INTEREST. HOW MUCH WILL BE DUE AT THE END OF…

A: Simple interest The method in which interest is charged only above the actual amount borrowed is…

Question

On January 1, 2020, Allure Company sold an equipment with a carrying amount of
P800,000, receiving a noninterest bearing note due in three years with a face
amount of P1,000,000. There is to established market value for the equipment.
The interest rate on similar obligations is 12%, The present value of 1 at 12% for
three periods is .712.
What amount should be reported as interest income for 2020/
A.288,000
B.120,000
C.96,000
D.85,440

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Use factors (from the tables) or a spreadsheet to determine the interest rate per period from the following equation: 0=-40,000 + 8000(P/IA,10) + 8000(P/F,*,15) 8.09% 13.50% 15.70% 5.04%
Calculate the nominal rate of interest corresponding to each of the following 3 scenarios. Note: Please make sure your f example 34.56% Maturity Amount Compounding Nominal Frequency Rate Principal Term $68,000.00 $304,358.90 Semi-annually 0.00% 17 years, 6 months $26,000.00 $34,173.56 Semi-annually 0.00% 6 years, 6 months $63,000.00 $262,151.96 Monthly 0.00% 16 years, 10 months
Complete the following using present value. (Use the Table 12.3.) (Do not round intermediate calculations. Round the "PV factor" to 4 decimal places and final answer to the nearest cent.) On PV Table 12.3 PV of amount desired at Amount Period Length of time desired at Rate Compounded Rate used PV factor used end of period used end of period 18,500 5 years 8 % Quarterly %6 ( Prev 7 of 18 Next > %24
Q6. A debt of $ 5700 is due, with interest at j2 = 8% in three years. It is agreed that the loan will be paid with payment of $X in one year and $ 3,000 in two years. If the money is worth , = 4%, %3D what is the value of X?
Determine the value of the single payment on November 8, 2023 that is economically equivalent to a payment stream consisting of: ● a payment of $10,670 on April 3, 2023, . a payment of $9,970 on September 6, 2023, ● a payment of $8,250 on January 31, 2024. Assume a simple interest rate of 3.1%. Apr. 3, 2023 $10,670 FV2 = $ FV1 = $ PV3 = $ Start by calculating the following values on the time diagram: Sep. 6, 2023 Total = $9,970 The single payment on November 8, 2023 is: $ Nov. 8, 2023 + FV2 FV1 + PV3 Total Jan. 31, 2024 $8,250
Present value interest factor of $1 per period at i% for n periods, PVIF(i,n). 9.5% 10.0% Period 0.5% 1.0% 1 0.8340 2 3 0.7462 0.7252 0.7050 0.6853 0.6663 0.6480 0.6302 0.6129 9 10 11 12 13 14 18 0.4746 1.5% 20% 2.5% 3.0 % 3.5 % 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0 % 7.5 % 8.0% 8.5% 9.0 % 0.9950 0.9901 0.9852 0.9804 0.9756 0.9709 0.9662 0.9615 0.9569 0.9524 0.9479 0.9434 0.9390 0.9346 0.9302 0.9259 0.9217 0.9174 0.9132 0.9091 0.9901 0.9803 0.9707 0.9612 0.9518 0.9426 0.9335 0.9246 0.9157 0.9070 0.8985 0.8900 0.8817 0.8734 0.8653 0.8573 0.8495 0.8417 0.9851 0.9706 0.9563 0.9423 0.9286 0.9151 0.9019 0.8890 0.8264 0.8763 0.8638 0.8516 0.8396 0.8278 0.8163 0.8050 0.7938 0.9802 0.9610 0.9422 0.9238 0.9060 0.8885 0.8714 0.8548 0.8386 0.7829 0.7722 0.7617 0.7513 08227 0.8072 0.7921 0.7773 0.7629 0.7488 0.7350 0.7216 0.7084 0.9754 0.9515 0.9283 0.9057 0.8839 0.8626 0.8420 0.8219 0.8025 0.6956 0.6830 0.7835 0.7651 0.7473 0.7299 0.7130 0.6966 0.6806 0.9705 0.9420 0.9145 0.8880 0.8623 0.8375 0.8135…
7. At what rate of compound interest per annum will a sum of Rs. 1200 become Rs. 1348.32 in 2 years? А. 6% В. 6.5% C. O 7% D. O 7.5%
14. An investment earns an annual interest rate of 12 percent compounded quarterly. What is the effective annual rate? А. 3.00%. В. 12.00%. С. 12.55%.
B. Complete the table by computing for the maturity values, compound interests and present values. Present Nominal Interest Time Total Compound Maturity value Interest Value Rate i(m) compounded rate in number of Interest per Years conversions period 20,000 6% Semi- (6) 8 (7) (8) (9) annually (10) 10% quarterly 2.5% 6 (12) 100,000
FOLLOWING QUESTIONS: 1. Consider that the number of periods and the amount of equal installment every year is the same with the given yet the prevailing market interest rate is 10%, how much would be the present value at 01/01/2020? A.973,684 B.1,088,815 C.1,217,105 D. 1,241,910 2. How much is the interest expense on December 31, 2020? A. 91,121 B. 108,143 C. 123,342 D. 136,913 3. How much is the interest expense on December 31, 2021? A. 108,143 B. 123,342 C. 136,913 D. 250,000 4. How much is the Present value at December 31, 2022? A. 600,459 B. 759,339 C. 901,195 D. 1,027,853 5. How many periods or equal installments to pay the Note Payable? A. 5 B. 6 C. 7 D. 8 6. How much is the annual installments? A. 200,000 B. 225,000 C. 250,000 D. 260,000 7. On 12/31/2020, the CURRENT PORTION of the Note Payable would be? A. 113,087 B. 126,658 C. 141,857 D. 158,879 PLEASE PROVIDE SOLUTIONS EVERY ANSWERS. THANK YOU!
What is the rate of interest if P40000 earned interest of P1200 in 140 days? (A) 2% B) 7.82% (c) 7.71% D 2.14%
Q1: If a loan of 12.5 million is made for a period of 33 days at a rate of 8,25% per annum, what is the total amount repayable at the end of the period? Assume 365/365 days in the year. 12,593,236.30 12,583,236.30 10,573,287.67 10,853,25.52 which one is correct please help.