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On January 1, 2021, Gee Company sold a machine with a cost of P500,000 and accumulated depreciation of P350,000 to Faye Company. In lieu of cash payment, Faye Company gave a 4-year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The prevailing rate of interest for a note of this type is 16%.   Required: Compute the following: (Round off PV factors to 4 decimal places before multiplying.)   1. Gain or loss on sale of machinery (place parenthesis if loss)

On January 1, 2021, Gee Company sold a machine with a cost of P500,000 and accumulated depreciation of P350,000 to Faye Company. In lieu of cash payment, Faye Company gave a 4-year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The prevailing rate of interest for a note of this type is 16%.   Required: Compute the following: (Round off PV factors to 4 decimal places before multiplying.)   1. Gain or loss on sale of machinery (place parenthesis if loss)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021, Gee Company sold a machine with a cost of P500,000 and accumulated depreciation of P350,000 to Faye Company. In lieu of cash payment, Faye Company gave a 4-year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The prevailing rate of interest for a note of this type is 16%.

 

Required: Compute the following: (Round off PV factors to 4 decimal places before multiplying.)

 

1. Gain or loss on sale of machinery (place parenthesis if loss)

2. Interest income

3. Current portion of the notes receivable

4. Non current portion of the notes receivable

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