On January 1, 2021, J Company sold equipment at a cost of P700,000 and accumulated depreciation of P300,000. The entity received as consideration P50,000 down and a P500,000 non interest-bearing note due on January 1, 2022. The prevailing rate of interest for a note of this type is 10%. The present value of 1 is 0.7513. How much is the present value of the note on December 31, 2021?

On January 1, 2021, J Company sold equipment at a cost of P700,000 and accumulated depreciation of P300,000. The entity received as consideration P50,000 down and a P500,000 non interest-bearing note due on January 1, 2022. The prevailing rate of interest for a note of this type is 10%. The present value of 1 is 0.7513. How much is the present value of the note on December 31, 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...

See similar textbooks

Similar questions

On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.
On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.
On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
Notes Receivable and Income On January 1, 2019, Pitt Company sold a patent to Chatham Inc. which had a carrying value on Pitts books of 10,000. Chatham gave Pitt a 60,000, non-interest-bearing note payable in five equal annual installments of 12,000 with the first payment due and paid on January 1, 2020. There was no established price for the patent, and the note has no ready market value. The prevailing rate of interest for a note of this type at January 1, 2019, is 12%. Required: 1. Prepare a schedule showing the income or loss before income taxes that Pitt should record for the years ended December 31, 2019 and 2020. Show supporting computations in good form. 2. Next Level If Pitt inadvertently failed to discount the note and instead recorded it at its gross value, what would be the effect on income or loss before income taxes for the year ended December 31, 2019?
On January 1, 2021, ABC Co. sold transportation equipment with a historical cost of P12,000,000 and accumulated depreciation of P7,000,000 in exchange for a noninterest-bearing note receivable of P4,000,000 due in 4 equal annual installments starting on December 31, 2021 and every December thereafter. The prevailing rate of interest for this type of note is 12%. 63)How much is the present value of note on January 1,2021? a. 3,037,349 b. 2,542,072 64)How much is the interest income in 2021? a. 805,924 b. 305,047 c. 3,401,831 d. 7,049,367 c. 396,882 d. 288,220 65)How much is the carrying amount of the receivable on December 31, 2021? a. 1,690,510 b. 2,401,830 66)How much is the current portion of notes receivable on December 31, 2021? a. 154,076 b. 635,518 67)How much is the current portion of notes receivable on December 31, 2021? a. 2,401,831 b. 1,847,121 c. 2,690,051 d. 2,847,120 c. 694, 951 d. 591,780 c. 2,810,051 d. 6,895,291
On January 1, 2025, Waterway Co. sold equipment in exchange for an $820000 zero-interest-bearing note due on January 1, 2018. The prevailing rare of interest for anote of this type at January 1, 2025 was 10%. The present value of $1 at 10% for three periods of 0.75131. What amount of interst revenue should be reported in Waterway's 2026 income statement?
On January 1, 2019, Bestbuy Inc. purchased land that had an assessed value of P6,000,000 at the time of purchase. AP9,000,000 non-interest-bearing note due January 1, 2021 was given in exchange. There was no established exchangeprice for the land, nor a ready market value for the note. The interest rate charged on a note of this type is 12%. The present value of 1 at 12% for 3 periods is 0.7118. The present value of an annuity of 1 at 12 % for 3 periods is 2.4018. In its December 31, 2019 balance sheet, what carrying amount should Bestbuy report as Note payable?a. P7,270,800 c. P8,070,048b. P7,174,944 d. P9,000,000
On January 1, 2019, Coco Company sold a building for P5,000,000 to Macao Company. Macao Company paid P500,000 down and signed a noninterest-bearing notes for the balance which is payable in 3 equal annual installments every December 31 of each year. The carrying value of the building is P4,200,000. Assume the prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. How much is the interest income for the year 2019? A. P432,324 B. P540,000 C. P492,324 D. P600,000
On January 1, 2021, Beauty Company sold a machine with a cost of P500,000 and accumulated depreciation of P350,000 to Gee Company. In lieu of cash payment, Gee Company gave Beauty Company a 4-year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The 10% interest rate is a realistic rate of interest for a note of this type. Required: Compute the following as of December 31, 2021: (Round off PV factors to 4 decimal places before multiplying.) 1. Effective interest rate 2. Gain or loss on sale of machinery (place parenthesis if loss) 3. Interest income
On January 1, 2021, Beauty Company sold a machine with a cost of P500,000 and accumulated depreciation of P350,000 to Gee Company. In lieu of cash payment, Gee Company gave Beauty Company a 4-year, P100,000, 10% note. The note requires interest to be paid annually on December 31. The 10% interest rate is a realistic rate of interest for a note of this type. Required: Compute the following as of December 31, 2021: (Round off PV factors to 4 decimal places before multiplying.) 4. Current portion of notes receivable Answer 5. Noncurrent portion of notes receivable
On January 1, 2017, Persephone Company sold a piece of transportation equipment with a historical cost of P1,000,000 and accumulated depreciation of P300,000 in exchange for cash of P100,000 and a noninterest-bearing note receivable of P800,000 due on January 1, 2020. The prevailing rate of interest for this type of note is 12%. How much is the carrying amount of the receivable on December 31, 2018?