On January 1, 2019, Format Company sold a tract of land that was acquired several years ago for P2,800,000. Format received a non-interest bearing note for P4,500,000 due on December 31,2021 in exchange for the land. There is no readily available fair value for the land, but the current market rate of interest for comparable notes is 8%. (Round present value factors to 4 decimal places. Required: (a) What are the amounts of interest revenue recognized in Format’s profit and loss for the years 2019 and 2020? (b) What is the carrying value of the note at December 31,2019 and at December 31,2020? (c) How would the note receivable be classified on the statement of financial position at December 31,2019 and at December 31,2020?
On January 1, 2019, Format Company sold a tract of land that was acquired several years ago for
P2,800,000. Format received a non-interest bearing note for P4,500,000 due on December 31,2021 in
exchange for the land. There is no readily available fair value for the land, but the current market rate of
interest for comparable notes is 8%. (Round present value factors to 4 decimal places.
Required:
(a) What are the amounts of interest revenue recognized in Format’s
and 2020?
(b) What is the carrying value of the note at December 31,2019 and at December 31,2020?
(c) How would the note receivable be classified on the
31,2019 and at December 31,2020?
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