Due to extreme financial difficulties, Armand Company had negotiated a restructuring of a 10% P 5,000,000 note payable due on Dec. 31, 2020. There is no accrued interest on the note. The creditor agreed to reduce the face amount to P 4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from Dec. 31, 2020. The present value of 1 at 10% for 3-periods is 0.75 and the present value of an ordinary annuity of 1 at 10% for 3-periods is 2.49. What is the interest expense for 2022? a. P 320,000 b. P 379,680 c. P 385,648 d. P 373,548
Due to extreme financial difficulties, Armand Company had negotiated a restructuring of a 10% P 5,000,000 note payable due on Dec. 31, 2020. There is no accrued interest on the note. The creditor agreed to reduce the face amount to P 4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from Dec. 31, 2020. The present value of 1 at 10% for 3-periods is 0.75 and the present value of an ordinary annuity of 1 at 10% for 3-periods is 2.49. What is the interest expense for 2022? a. P 320,000 b. P 379,680 c. P 385,648 d. P 373,548
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 49P
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Due to extreme financial difficulties, Armand Company had negotiated a restructuring of a 10% P 5,000,000 note payable due on Dec. 31, 2020. There is no accrued interest on the note. The creditor agreed to reduce the face amount to P 4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from Dec. 31, 2020. The present value of 1 at 10% for 3-periods is 0.75 and the present value of an ordinary annuity of 1 at 10% for 3-periods is 2.49. What is the interest expense for 2022?
a. P 320,000
b. P 379,680
c. P 385,648
d. P 373,548
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