On Jan. 1, 2021, Muta Co. received a P1,200,000, noninterest bearing note in exchange for land with carrying amount of P1,000,000. The note is due in three equal annual installments every Dec. 31. The effective interest rate is 15%. The present value of ordinary annuity of 1 at 15% for 3 periods is 2.2832 Requirements: 1. Prepare the amortization table. 2. Determine the current and non-current portions of the note on December 31, 2021. 3. Provide all the necessary journal entries.
On Jan. 1, 2021, Muta Co. received a P1,200,000, noninterest bearing note in exchange for land with carrying amount of P1,000,000. The note is due in three equal annual installments every Dec. 31. The effective interest rate is 15%. The present value of ordinary annuity of 1 at 15% for 3 periods is 2.2832 Requirements: 1. Prepare the amortization table. 2. Determine the current and non-current portions of the note on December 31, 2021. 3. Provide all the necessary journal entries.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On Jan. 1, 2021, Muta Co. received a P1,200,000, noninterest bearing note in exchange
for land with carrying amount of P1,000,000. The note is due in three equal annual
installments every Dec. 31. The effective interest rate is 15%. The present value of
ordinary annuity of 1 at 15% for 3 periods is 2.2832
Requirements:
1. Prepare the amortization table.
2. Determine the current and non-current portions of the note on December 31,
2021.
3. Provide all the necessary
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