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 of each year for three years. The applicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is 2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shipping charges for the equipment of P200,000 and installation charges of P350,000 were incurred. What is the capitalized 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 of each year for three years. The applicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is 2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shipping charges for the equipment of P200,000 and installation charges of P350,000 were incurred. What is the capitalized cost of the equipment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 of each year for three years. The
applicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is
2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shipping
charges for the equipment of P200,000 and installation charges of P350,000 were incurred. What is the
capitalized cost of the equipment?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F925dba2e-5496-4bec-824d-e314c61db5bd%2Fe0e612d0-241a-4684-9d24-78645116526e%2Frkeiswp_processed.png&w=3840&q=75)
Transcribed Image Text: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 of each year for three years. The
applicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is
2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shipping
charges for the equipment of P200,000 and installation charges of P350,000 were incurred. What is the
capitalized cost of the equipment?
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