On January 1 ,2020 ABC Company sold a building and received as consideration P1,000,000 cash and P4,000,000 noninterest bearing note due on January 1, 2023. There was no established exchange price for the building and the note had no ready market. The prevailing rat of interest for a note of this type on January 1, 2020 was 10%. The present value of 1 at 10% for three periods is 0.75 and the present value of annuity of 1 at 10% for three periods is 2.4869. What amount of interest revenue should be reported for 2021?

On January 1 ,2020 ABC Company sold a building and received as consideration P1,000,000 cash and P4,000,000 noninterest bearing note due on January 1, 2023. There was no established exchange price for the building and the note had no ready market. The prevailing rat of interest for a note of this type on January 1, 2020 was 10%. The present value of 1 at 10% for three periods is 0.75 and the present value of annuity of 1 at 10% for three periods is 2.4869. What amount of interest revenue should be reported for 2021?

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...

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On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000
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