On January 1, 2021, ABC Co. sold equipment with a carrying amount of P480,000 in exchange for a P600,000 non-interest-bearing note due January 1, 2024. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 1, 2021 was 10%. The present value of 1 at 10% for three periods is 0.7513. How much is the carrying value of the note receivable as of December 31, 2021 statement of financial position? How much should Matnog Co. report as interest income in its 2021 profit or loss? How much should Matnog Co. report as loss on sale of equipment in its 2021 profit or loss?
On January 1, 2021, ABC Co. sold equipment with a carrying amount of P480,000 in exchange for a P600,000 non-interest-bearing note due January 1, 2024. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 1, 2021 was 10%. The present value of 1 at 10% for three periods is 0.7513. How much is the carrying value of the note receivable as of December 31, 2021 statement of financial position? How much should Matnog Co. report as interest income in its 2021 profit or loss? How much should Matnog Co. report as loss on sale of equipment in its 2021 profit or loss?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021, ABC Co. sold equipment with a carrying amount of P480,000 in exchange for a P600,000 non-interest-bearing note due January 1, 2024. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 1, 2021 was 10%. The present value of 1 at 10% for three periods is 0.7513.
- How much is the carrying value of the note receivable as of December 31, 2021
statement of financial position ? - How much should Matnog Co. report as interest income in its 2021 profit or loss?
- How much should Matnog Co. report as loss on sale of equipment in its 2021 profit or loss?
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