The Umaasa Company included the following in its notes receivable as of December 31, 2022: Note receivable from sale of land. P1,320,000Note receivable from consultation 1,800,000 Note receivable from sale of equipment 2,400,000 In connection with your audit, you were able to gather the following transactions during 2022 and other information pertaining to the company's notes receivable: On January 1, 2022, Umaasa Company sold a tract of land. The land, purchased 10 years ago, was carried on Umaasa Company's books at a value of P750,000. Umaasa received a noninterest-bearing note for P1,320,000. The note is due on December 31, 2024. There is no readily available market value for the land, but the current market rate of interest for comparable notes is 11%. On January 1, 2022, Umaasa Company finished consultation services and accepted in exchange a promissory note with a face value of P1,800,000, a due date of December 31, 2025, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 12%. On January 1, 2022, Umaasa Company sold equipment with a carrying amount of P2,400,000 to X Company. As payment, X gave Umaasa Company a P6,000,000 note. The note bears an interest rate of 4% and is to be repaid in five annual installments of P1,200,000 (plus interest on the outstanding balance). The first payment was received on December 31, 2022. The market price of the equipment is not reliably determinable. The prevailing rate of interest for notes of this type is 13%.The consultation service fee revenue that should be recognized in 2022 isThe gain on sale of equipment that should be recognized in 2022 isThe noncurrent notes receivable as of December 31, 2022 isThe current portion of long-term notes receivable as of December 31, 2022 isThe net adjustment to net income in 2022 is

Net Income is the amount an individual or organization makes after deducting costs and expenses from…

Answered: The consultation service fee revenue…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 18RQSC

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The Umaasa Company included the following in its notes receivable as of December 31, 2022:

Note receivable from sale of land. P1,320,000

Note receivable from consultation 1,800,000

Note receivable from sale of equipment 2,400,000

In connection with your audit, you were able to gather the following transactions during 2022 and other information pertaining to the company's notes receivable:

On January 1, 2022, Umaasa Company sold a tract of land. The land, purchased 10 years ago, was carried on Umaasa Company's books at a value of P750,000. Umaasa received a noninterest-bearing note for P1,320,000. The note is due on December 31, 2024. There is no readily available market value for the land, but the current market rate of interest for comparable notes is 11%.

On January 1, 2022, Umaasa Company finished consultation services and accepted in exchange a promissory note with a face value of P1,800,000, a due date of December 31, 2025, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 12%.

On January 1, 2022, Umaasa Company sold equipment with a carrying amount of P2,400,000 to X Company. As payment, X gave Umaasa Company a P6,000,000 note. The note bears an interest rate of 4% and is to be repaid in five annual installments of P1,200,000 (plus interest on the outstanding balance). The first payment was received on December 31, 2022. The market price of the equipment is not reliably determinable. The prevailing rate of interest for notes of this type is 13%.

The consultation service fee revenue that should be recognized in 2022 is
The gain on sale of equipment that should be recognized in 2022 is
The noncurrent notes receivable as of December 31, 2022 is
The current portion of long-term notes receivable as of December 31, 2022 is
The net adjustment to net income in 2022 is

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