In return for a plot of land on January 1st, 20x1, Diminished Co. made a cash down payment of P400,000 and issued a P1,800,000 noninterest bearing note. The loan is payable on December 31 in three equal yearly instalments. Case 1: The property is worth P2,000,000. On initial recognition, grant entrance.
In return for a plot of land on January 1st, 20x1, Diminished Co. made a cash down payment of P400,000 and issued a P1,800,000 noninterest bearing note. The loan is payable on December 31 in three equal yearly instalments. Case 1: The property is worth P2,000,000. On initial recognition, grant entrance.
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 18DQ: LO.4, 7 In December 2019, Carl Corporation sold land it held as an investment. The corporation...
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![In return for a plot of land on January 1st, 20x1, Diminished Co. made a cash down payment of
P400,000 and issued a P1,800,000 noninterest bearing note. The loan is payable on December
31 in three equal yearly instalments.
Case 1: The property is worth P2,000,000. On initial recognition, grant entrance.
Case 2: It is impossible to estimate with accuracy what the land is worth. 9 percent is the
current market rate of interest for comparable debt securities. Give the journal entry for the
note's first acknowledgement as well as the entries for the note's subsequent payments.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F77cd7a7f-3b52-4a5b-9553-4ca72962d7ab%2F065705dd-131d-4fd5-854a-d36322893a94%2Fpg4df3l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:In return for a plot of land on January 1st, 20x1, Diminished Co. made a cash down payment of
P400,000 and issued a P1,800,000 noninterest bearing note. The loan is payable on December
31 in three equal yearly instalments.
Case 1: The property is worth P2,000,000. On initial recognition, grant entrance.
Case 2: It is impossible to estimate with accuracy what the land is worth. 9 percent is the
current market rate of interest for comparable debt securities. Give the journal entry for the
note's first acknowledgement as well as the entries for the note's subsequent payments.
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