On August 1, 2006, ABC purchased a new machine on a deferred payment basis. A down payment of P100,000 was made and the balance is payable in P100,000 annually for 4 years. The current interest is 12%.The present value of an annuity at 12% for 4 years is 3.04 and the present value of an amount at the end of 5th year at 12% is .064. The same machine could be acquired on cash basis at P400,000. ABC should record the machine at 500,000 400,000 403,735 303,735

On August 1, 2006, ABC purchased a new machine on a deferred payment basis. A down payment of P100,000 was made and the balance is payable in P100,000 annually for 4 years. The current interest is 12%.The present value of an annuity at 12% for 4 years is 3.04 and the present value of an amount at the end of 5th year at 12% is .064. The same machine could be acquired on cash basis at P400,000. ABC should record the machine at 500,000 400,000 403,735 303,735

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 3MC: Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of...

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