On January 1, 2019, Coco Company sold a building for P5,000,000 to Macao Company. Macao Company paid P500,000 down and signed a noninterest-bearing notes for the balance which is payable in 3 equal annual installments every December 31 of each year. The carrying value of the building is P4,200,000. Assume the prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. How much is the interest income for the year 2019? A. P432,324 B. P540,000 C. P492,324 D. P600,000
On January 1, 2019, Coco Company sold a building for P5,000,000 to Macao Company. Macao Company paid P500,000 down and signed a noninterest-bearing notes for the balance which is payable in 3 equal annual installments every December 31 of each year. The carrying value of the building is P4,200,000. Assume the prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. How much is the interest income for the year 2019? A. P432,324 B. P540,000 C. P492,324 D. P600,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2019, Coco Company sold a building for P5,000,000 to Macao Company. Macao Company paid P500,000 down and signed a noninterest-bearing notes for the balance which is payable in 3 equal annual installments every December 31 of each year. The carrying value of the building is P4,200,000. Assume the prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018.
How much is the interest income for the year 2019?
A. P432,324
B. P540,000
C. P492,324
D. P600,000
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