Hot issue company sold its machine with a carrying amount of P2,000,000 in exchange for 2,500,000 non-interest bearing note that requires five annual payment of 500,000 starting on January 1, 2022 the market interest for similar notes was 10% and the relevant present value factors are: present value of a single payment at 10% for 5 periods 0.621 present value of an ordinary annuity of 1 at 10% for 5 periods 3.791 present value of annuity due of 1 at 10% for 5 periods 4.170 how much is the gain or loss on sale of machine? a. 104,500 gain b. 85,000 loss c. 85,000 gain d. 104,500 loss
Hot issue company sold its machine with a carrying amount of P2,000,000 in exchange for 2,500,000 non-interest bearing note that requires five annual payment of 500,000 starting on January 1, 2022 the market interest for similar notes was 10% and the relevant present value factors are: present value of a single payment at 10% for 5 periods 0.621 present value of an ordinary annuity of 1 at 10% for 5 periods 3.791 present value of annuity due of 1 at 10% for 5 periods 4.170 how much is the gain or loss on sale of machine? a. 104,500 gain b. 85,000 loss c. 85,000 gain d. 104,500 loss
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hot issue company sold its machine with a carrying amount of P2,000,000 in exchange for 2,500,000 non-interest bearing note that requires five annual payment of 500,000 starting on January 1, 2022
the market interest for similar notes was 10% and the relevant present value factors are:
present value of a single payment at 10% for 5 periods 0.621
present value of an ordinary annuity of 1 at 10% for 5 periods 3.791
present value of annuity due of 1 at 10% for 5 periods 4.170
how much is the gain or loss on sale of machine?
a. 104,500 gain
b. 85,000 loss
c. 85,000 gain
d. 104,500 loss
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