PRAISEWORTHY Company is a dealer in equipment. On January 1, 2020, PRAISEWORTHY Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are: PV of 1 at 8% for 5 periods 0.68 PV of an ordinary annuity of 1 at 8% for 5 periods 3.99 PV of an annuity due of 1 at 8% for 5 periods 4.31 What is the interest income to be recognized for the year ended December 31, 2020?
PRAISEWORTHY Company is a dealer in equipment. On January 1, 2020, PRAISEWORTHY Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are: PV of 1 at 8% for 5 periods 0.68 PV of an ordinary annuity of 1 at 8% for 5 periods 3.99 PV of an annuity due of 1 at 8% for 5 periods 4.31 What is the interest income to be recognized for the year ended December 31, 2020?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![PRAISEWORTHY Company is a dealer in equipment. On January 1, 2020, PRAISEWORTHY Company sold an equipment
with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the
end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are:
PV of 1 at 8% for 5 periods
0.68
PV of an ordinary annuity of 1 at 8% for 5 periods
3.99
PV of an annuity due of 1 at 8% for 5 periods
4.31
What is the interest income to be recognized for the year ended December 31, 2020?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa4fb1ba4-715f-4024-81bb-16ba902778c5%2Ff98f2f8c-49c2-4a9a-b295-131cf1a39a2e%2Ffs4czpo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PRAISEWORTHY Company is a dealer in equipment. On January 1, 2020, PRAISEWORTHY Company sold an equipment
with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the
end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are:
PV of 1 at 8% for 5 periods
0.68
PV of an ordinary annuity of 1 at 8% for 5 periods
3.99
PV of an annuity due of 1 at 8% for 5 periods
4.31
What is the interest income to be recognized for the year ended December 31, 2020?
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