PROBLEM: On December 31, 2019, FJ Company sold for P2,400,000 an old equipment having an original cost of P4,320,000 and carrying amount of P1,920,000. The terms of the sale were P480,000 down payment and P960,000 payable on December 31 of the next two years. The sale agreement made no mention of interest. However, 9% would be a fair rate for this type of transaction. Compute for the following: a) Gain/Loss on sale of equipment (Specify if gain or loss.) b) Interest income for 2020 c) Carrying amount of the note receivable on December 31, 2020.
PROBLEM: On December 31, 2019, FJ Company sold for P2,400,000 an old equipment having an original cost of P4,320,000 and carrying amount of P1,920,000. The terms of the sale were P480,000 down payment and P960,000 payable on December 31 of the next two years. The sale agreement made no mention of interest. However, 9% would be a fair rate for this type of transaction. Compute for the following: a) Gain/Loss on sale of equipment (Specify if gain or loss.) b) Interest income for 2020 c) Carrying amount of the note receivable on December 31, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PROBLEM:
On December 31, 2019, FJ Company sold for P2,400,000 an old equipment having an original cost of
P4,320,000 and carrying amount of P1,920,000. The terms of the sale were P480,000 down payment
and P960,000 payable on December 31 of the next two years. The sale agreement made no mention
of interest. However, 9% would be a fair rate for this type of transaction. Compute for the following:
a) Gain/Loss on sale of equipment (Specify if gain or loss.)
b) Interest income for 2020
c) Carrying amount of the note receivable on December 31, 2020.
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