On January 1, 2006, Mill Company sold a building and received asconsideration P1,000,000 cash and a P4,000,000 noninterest bearing note dueon January 1, 2009. There was no established exchange price for the building,and the note had no ready market. The prevailing rate of interest for a note ofthis type at January 1, 2006, was 10%. The present value of 1 at 10% for threeperiods is 0.75.19. What amount of interest revenue should be included in Mill's 2006 incomestatement?a. 370,000b. 400,000c. 300,000d. 330,000

Given,Book Value = P 1,000,000Face Value = P 4,000,000Rate = 10%Present Value = 0.75

Answered: On January 1, 2006, Mill Company sold a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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