On January 1, 2021, Divino Company sold equipment with carrying amount of P800,000 to Jocelle Company. As payment, Jocelle gave Divino Company a P1,200,000 note. The note bears an interest rate of 5% and is to be repaid in three annual installments of P400,000 plus interest on outstanding balance. The first payment was received on December 31, 2021. The market price of the equipment is not readily determinable. The prevailing rate of interest for notes of this type is 10%. The interest income to be recognized in 2022 is:
On January 1, 2021, Divino Company sold equipment with carrying amount of P800,000 to Jocelle Company. As payment, Jocelle gave Divino Company a P1,200,000 note. The note bears an interest rate of 5% and is to be repaid in three annual installments of P400,000 plus interest on outstanding balance. The first payment was received on December 31, 2021. The market price of the equipment is not readily determinable. The prevailing rate of interest for notes of this type is 10%. The interest income to be recognized in 2022 is:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 26
On January 1, 2021, Divino Company sold equipment with carrying amount of P800,000 to Jocelle Company. As payment, Jocelle gave Divino Company a P1,200,000 note. The note bears an interest rate of 5% and is to be repaid in three annual installments of P400,000 plus interest on outstanding balance. The first payment was received on December 31, 2021. The market price of the equipment is not readily determinable. The prevailing rate of interest for notes of this type is 10%.
- The interest income to be recognized in 2022 is:
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