TRUE/ FALSE P1,200,000 in exchange for the sale of a commodity. If thecustomer had paid in cash at the sale date, the purchase price6. Bind Co. receives a 2-year, noninterest-bearing note ofwould have been P800,000. At initial recognition, Fold Co.P400,000. The note requires lump sum payment at maturitP500,000 from the sale of equipment with a cash price of5. Fold Co. receives a 2-year, noninterest-bearing note ofrecords unearned interest of P400,000.1 Interest receivable is computed Lmuliplying the carrying, On Jan. 1, 20x1, Crybaby Co. received anote with face amount of P2M and anpropriately recognized itat P1,241,843. The note matures in lumpDec. 31, 20x2 is P497,370.3. Raining Co. receives a 3-year, noninterest-bearing note ofP1,000,000. Raining Co. determines that the effective interestrate on the transaction is 10%. The initial carrying amount ofthe note receivable is computed as: P1,000,000 x PV of 1 @10%, n=3.4 Wet Co. receives a noninterest-bearing note of P3,000,000. Thenote is collectible in three equal annual installments ofP1,000,000, due at the end of each year. Wet Co. determinesthat the effective interest rate on the transaction is 10%. Theinitial carrying amount of the note receivable is computed asP1,000,000 x PV of 1 @10%, n=3.records unearned interest of P400,000.sum payment at maturity transaction is 10%. The interest income in Year 1 is P50,000.date. Bind Co. determines that the effective interest rate on thecarrying amount of the note was P900,000. At the end of Yearamortization of the note in Year 1 must be P100,00010. Pawn Co. receives a P1,200,000, noninterest-bearing note thatis collectible in installments. On initial recognition, thetransaction is 10%. The interest income in Year 1 is P50.0007. Cut Co. receives a long-term, noninterest-bearing noteP100,000. The note requires a lump sum payment at maturitydate. Cut Co. determines that the effective interest rate on thetransaction is 10% while the appropriate present value factoris 0.90. The interest income in Year 1 is P9,000.8. Use the information in the preceding problem (i.e., Cut Co.).The interest income in Year 2 is P9,900.9. Bond Co. receives a P1,000,000, noninterest-bearing note thatis collectible in installments.On initial recognition, thecarrying amount of the note was P900,000. If the amortizationof the note during the period is P50,000, the carrying amouof the note at the end of the period must be P950,000.10. Pawn Co. receives a P1,200,000, noninterest-bearing noteis collectible in installments. On initialcarrying amount of the note was P900.000. At the end of she1, the carrying amount of the note was P800,000,amortization of the note in Year 1 must be P100,000recognition, thePRO

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ROBLEM 1: Interest receivable is computed by multiplyir amount of a note by the effective interest rate. On Jan. 1, 20x1, Crybaby Co. received a noninterest-bearing note with face amount of P2M and appropriately recognized it at P1,241,843. The note matures in lump sum on Dec. 31, 20x5. The effective interest is 10%. The unamortized discount on Dec. 31, 20x2 is P497,370. Raining Co. receives a 3-year, noninterest-bearing note of P1,000,000. Raining Co. determines that the effective interest rate on the transaction is 10%. The initial carrying amount of the note receivable is computed as: P1,000,000 x PV of 1 @10%, n=3.

ROBLEM 1: Interest receivable is computed by multiplyir amount of a note by the effective interest rate. On Jan. 1, 20x1, Crybaby Co. received a noninterest-bearing note with face amount of P2M and appropriately recognized it at P1,241,843. The note matures in lump sum on Dec. 31, 20x5. The effective interest is 10%. The unamortized discount on Dec. 31, 20x2 is P497,370. Raining Co. receives a 3-year, noninterest-bearing note of P1,000,000. Raining Co. determines that the effective interest rate on the transaction is 10%. The initial carrying amount of the note receivable is computed as: P1,000,000 x PV of 1 @10%, n=3.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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