Answered: In relation to this transaction, what…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On July 1, 2019, Optimistic Company sold a machine costing P500,000 with accumulated depreciation of P380,000. On the date of sale, Optimistic received as consideration for the sale, a P300,000 noninterest-bearing note, due July 1, 2022. There was no established exchange price for the equipment and the note had no ready market. The prevailing rate of interest for a note of this type at July 1, 2019 was 12% and 13% on December 31, 2019. In relation to this transaction, what is the total income to be recognized in Optimistic’s 2019 statement of comprehensive income? (Round PVF to 4 decimals)

P119,165 P180,000
P101,445 P106,352

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