January 1, 2023, Pelicans Company sold an equipment to Hornets Company which had a carrying value on Pelicans' books of P100,000. Hornets gave Pelicans a P600,000, non-interest-bearing note, payable in five equal annual installments of P120,000 with the first payment due on December 31, 2023. There was no established price for the equipment and the note has no ready market value. The prevailing rate of interest for a similar note at January 1, 2023 was 12% Present value (PV) and future value (FV) factors for 5 periods at 12% are: PV of P1-0.57 PV of an annuity of P1-3.60 FV of P1-1.76 FV of an annuity of P1-6.35 Question: 35. How much is the amortized cost of the notes receivable at December 31, 2023? A. P483,840 B. P432,000 C. P363,840
On January 1, 2023, Pelicans Company sold an equipment to Hornets Company which had a carrying value on Pelicans' books of P100,000. Hornets gave Pelicans a P600,000, non-interest-bearing note, payable in five equal annual installments of P120,000 with the first payment due on December 31, 2023. There was no established price for the equipment and the note has no ready market value.
The prevailing rate of interest for a similar note at January 1, 2023 was 12% Present value (PV) and future value (FV) factors for 5 periods at 12% are:
PV of P1-0.57 PV of an annuity of P1-3.60
FV of P1-1.76 FV of an annuity of P1-6.35
Question:
35. How much is the amortized cost of the notes receivable at December 31, 2023?
A. P483,840
B. P432,000
C. P363,840
D. P236,540
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