Kirk Company purchased equipment by making a down payment of P400, 000 and issuing a note payable for P1, 800,000. A payment of P600, 000 is to be made at the end each year for three years. Theapplicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shippingcharges for the equipment of P200, 000 and installation charges of P350, 000 were incurred. What is thecapitalized cost of the equipment?

Kirk Company purchased equipment by making a down payment of P400, 000 and issuing a note payable for P1, 800,000. A payment of P600, 000 is to be made at the end each year for three years. Theapplicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shippingcharges for the equipment of P200, 000 and installation charges of P350, 000 were incurred. What is thecapitalized cost of the equipment?

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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