The following information pertains to a sale of real estate by South Co. to Nord. Co. on December 31, 2009: Carrying amount 4,000,000 Sales price: Cash 600,000 Purchase money mortgage 5,400,000 The mortgage is payable in nine annual installments of P600,000 beginning December 31, 2010, plus interest of 10%. The December 31, 2010 installment was paid as scheduled, together with interest of P540,000. South uses the cost recovery method to account for the sale. What amount of income should South recognize in 2010 from the real estate sale and its financing?

The following information pertains to a sale of real estate by South Co. to Nord. Co. on December 31, 2009: Carrying amount 4,000,000 Sales price: Cash 600,000 Purchase money mortgage 5,400,000 The mortgage is payable in nine annual installments of P600,000 beginning December 31, 2010, plus interest of 10%. The December 31, 2010 installment was paid as scheduled, together with interest of P540,000. South uses the cost recovery method to account for the sale. What amount of income should South recognize in 2010 from the real estate sale and its financing?

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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D1.
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