Darryl Company is a dealer in equipment. On January 1, 2008, Darryl Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are:PV of 1 at 8% for 5 periods 0.68PV of an ordinary annuity of 1 at 8% for 5 periods 3.99PV of an annuity due of 1 at 8% for 5 periods 4.31 . What is the carrying amount of this note on January 1, 2008? A. 3,400,000 B. 3,990,000 C. 4,310,000 D. 5,000,000
Darryl Company is a dealer in equipment. On January 1, 2008, Darryl Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are:PV of 1 at 8% for 5 periods 0.68PV of an ordinary annuity of 1 at 8% for 5 periods 3.99PV of an annuity due of 1 at 8% for 5 periods 4.31 . What is the carrying amount of this note on January 1, 2008? A. 3,400,000 B. 3,990,000 C. 4,310,000 D. 5,000,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Darryl Company is a dealer in equipment. On January 1, 2008, Darryl Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are:PV of 1 at 8% for 5 periods 0.68PV of an ordinary annuity of 1 at 8% for 5 periods 3.99PV of an annuity due of 1 at 8% for 5 periods 4.31 . What is the carrying amount of this note on January 1, 2008?
A. 3,400,000
B. 3,990,000
C. 4,310,000
D. 5,000,000
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