On January 1, 2022, Parrot Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest-bearing note due January 1, 2025. There was no established exchange price for the equipment. The prevailing rate of interest for a similar note was 10% and the present value of 1 at 10% for three periods is 0.75. 1. How much is the Loss on Sale of equipment on January 1, 2022? 2. What is the interest income on December 31, 2023?
On January 1, 2022, Parrot Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest-bearing note due January 1, 2025. There was no established exchange price for the equipment. The prevailing rate of interest for a similar note was 10% and the present value of 1 at 10% for three periods is 0.75. 1. How much is the Loss on Sale of equipment on January 1, 2022? 2. What is the interest income on December 31, 2023?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2022, Parrot Company sold equipment with a carrying amount of P4,800,000 in
exchange for a P6,000,000 noninterest-bearing note due January 1, 2025. There was no
established exchange price for the equipment. The prevailing rate of interest for a similar note
was 10% and the present value of 1 at 10% for three periods is 0.75.
1. How much is the Loss on Sale of equipment on January 1, 2022?
2. What is the interest income on December 31, 2023?
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