On June 1, 2022, EBD sold equipment to EHL in exchange for a zero-interest bearing note with a face value of P55,000, with payment due in 12 months. The fair value of the equipment on the date of sale was P50,000. How much is the amount of revenue to be recognized on this transaction in 2022? (3 points)

On June 1, 2022, EBD sold equipment to EHL in exchange for a zero-interest bearing note with a face value of P55,000, with payment due in 12 months. The fair value of the equipment on the date of sale was P50,000. How much is the amount of revenue to be recognized on this transaction in 2022? (3 points)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: On January 1, 2020, Jet Air Inc. contracted with Systems Plus Inc. to manufacture heavy equipment.…

A: Equipment recorded value = Present value of face value of note + Present value of interest payments…

Q: On January 1, 2022, Parrot Company sold equipment with a carrying amount of P4,800,000 in exchange…

A: Time value of money :— According to this concept, value of money in present day is greater than the…

Q: n April 1, 2023 Blo Inc. receives a 6-year $60,000 note in exchange for a parcel of land. The cost…

A: Present value is the equivalent value today of the future money based on time value of money.Given:…

Q: n January 1, 2022, Fulbright Company sold goods Blue Dirt Company for $400,000 in exchange for…

Q: On June 1, 2023, Redwood Manufacturin Co. sold equipment to Caramel Company in exchange for a…

A: Accrual accounting records revenue and expenses when they are earned or incurred, regardless of when…

Q: On December 31, 2022, Shamrock plc acquired a computer from Plato Group by issuing a £606,000…

A: Future Value :— Future Value Means The Value of assets in Future. the value of a current asset at a…

Q: January 1, 2023, Hornets Company sold land that originally cost P400,000 to the Egi Company. As…

A: Here is note receivable for Hornets. Note receivable is an asset which is a promissory note written…

Q: On January 2, 2023, Sunland Inc. sells goods to Bramble Company in exchange for a…

A: Interest is a amount which is paid by a borrower to the person from the money has been taken by him…

Q: On June 1, 2021, Blossom & Sons sold equipment to James Landscaping Service in exchange for a…

A: Note means an instrument acknowledging as debt due from one party to another party. It carry defined…

Q: 16. On 1 January 2022, Marina Tower exchanged equipment for an $800,000 zero-interest-bearing note…

A: When more than one asset is purchased at the lumpsum price then the cost is allocated to the…

Q: On January 1, 2025, Waterway Co. sold equipment in exchange for an $820000 zero-interest-bearing…

A: Interest revenue is the amount of money earned by the entity on notes, bonds or debentures issued.…

Q: On January 1, 2021, Mumbleford & Sons Co. sold equipment to Mulligan Care Service in exchange for a…

A: Zero coupon bonds means those bonds which were issued for money or any assets but for which no…

Q: Oriole Inc. enters into an agreement on March 1, 2023, to sell aluminum ingots for $240,000 cash to…

A: The agreement includes sales of $240,000 which will be repurchased at an interest of 2%. The…

Question

On June 1, 2022, EBD sold equipment to EHL in exchange for a zero-interest bearing note with a face value
of P55,000, with payment due in 12 months. The fair value of the equipment on the date of sale was
P50,000. How much is the amount of revenue to be recognized on this transaction in 2022? (3 points)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On January 1, 2021, Anna Company sold a piece of equipment to Banana Company with a cost of P3,500,000 and accumulated depreciation of P600,000 in exchange for an annual 10% interest-bearing note, P3,000,000. Banana is required to make four equal annual payments of principal plus interest. What is the interest income for the year 2022?
On January 1, 2021, Wooten Technology Associates sold computer equipment to the Denison Company. Delivery was made on January 1, 2021, but payment for the equipment of $10,000 is not due until December 31, 2021. Assuming that Wooten views the time value of money to be a significant component of this transaction and that an 8% interest rate is applicable, how much sales revenue would Wooten recognize on January 1, 2021?
On 1 July 2019, Sitara Ltd sells a computer to Kitara Ltd. The computer cost Sitara Ltd $9000. Rather than selling the item for a cash price or a short-term claim for cash of $12 009, Sitara Ltd accepts a promissory note that requires Kitara Ltd to make four annual payments of $4000 each, the first one to be made on 30 June 2020. The difference between the gross receipts and the current sales price represents interest revenue earned by Sitara Ltd over the note period. The rate implicit in the arrangement is 12 per cent. Provide a journal entry with a clear distribution of instalment payment into interest and principal amount as of 30/6/2021.
On November 1, 2022, Roberts Inc. provided consulting services in exchange for a one-year, 10% promissory note with a face value of $30,000. The note is interest-bearing. The note’s face value plus accrued interest compounded annually is due to be paid back when the nature matures on November 1, 2023. What should be the amount of “Service Revenue” Roberts recognizes in 2022? $33,000 $30,000 $27,273 $27,000
On January 1, 2023, Hornets Company sold land that originally cost P400,000 to the Egi Company. As payment, Egi gave Hornets a P600,000 note. The note bears an interest rate of 8% and is to be repaid in three annual installments of P200,000 plus interest on the outstanding balance. The first payment is due on December 31, 2023. The market price of the land is not reliably determinable. The prevailing interest rate for notes of this type is 8%. Question:30. Assume the same facts given in the problem, but change the prevailing interest rate for notes of this type to 12% (instead of 8%). At how much should the note be recorded on January 1, 2023? A. P600,000B. P560,138C. P480,360D. P427,080