On June 1, 20x4, a tract of land that originally cost P 800,000 was sold to SHE Company. The company received a P 1,200,000 note as payment. It bears interest rate of 4% and is payable in 3 annual installments of P 400,000 plus interest on the outstanding balance. The prevailing interest rate for this type of note is 10%. The present value table shows the following present value factors of 1 at 10%. Present value factor of 1 for 3 periods 0.75132 Present value factor of 1 for 2 periods 0.82645 Present value factor of 1 for 1 period 0.90909 Present value factor of an ordinary annuity 1 for 3 periods 2.48685 How much interest income should be reported for 20x4
On June 1, 20x4, a tract of land that originally cost P 800,000 was sold to SHE Company. The company received a P 1,200,000 note as payment. It bears interest rate of 4% and is payable in 3 annual installments of P 400,000 plus interest on the outstanding balance. The prevailing interest rate for this type of note is 10%. The present value table shows the following present value factors of 1 at 10%. Present value factor of 1 for 3 periods 0.75132 Present value factor of 1 for 2 periods 0.82645 Present value factor of 1 for 1 period 0.90909 Present value factor of an ordinary annuity 1 for 3 periods 2.48685 How much interest income should be reported for 20x4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On June 1, 20x4, a tract of land that originally cost P 800,000 was sold to SHE Company. The company received a P 1,200,000 note as payment. It bears interest rate of 4% and is payable in 3 annual installments of P 400,000 plus interest on the outstanding balance. The prevailing interest rate for this type of note is 10%.
The present value table shows the following present value factors of 1 at 10%.
| Present value factor of 1 for 3 periods | 0.75132 |
| Present value factor of 1 for 2 periods | 0.82645 |
| Present value factor of 1 for 1 period | 0.90909 |
| Present value factor of an ordinary annuity 1 for 3 periods | 2.48685 |
How much interest income should be reported for 20x4?
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