To encourage entities to expand their operations in a specified development zone, where it is difficult for entities to obtain financing for their projects, the government provides interest-free loans to fund the purchase of manufacturing equipment. On January 1, 2021, in accordance with the development scheme, an entity receives an interest-free loan from the government for P5,000,000 for a period of three years. The market rate of interest for similar loans is 5% per year (is the market rate of interest for similar three-year loan to the entity). There are no future performance conditions attached to the interest-free loan. What amount should be included immediately in the profit or loss on January 1, 2021? A. NONE B. 238,095 C. 464, 853 D. 680,815
To encourage entities to expand their operations in a specified development zone, where it is difficult for
entities to obtain financing for their projects, the government provides interest-free loans to fund the
purchase of manufacturing equipment. On January 1, 2021, in accordance with the development scheme, an
entity receives an interest-free loan from the government for P5,000,000 for a period of three years.
The market rate of interest for similar loans is 5% per year (is the market rate of interest for similar three-year loan to the entity). There are no future performance conditions attached to the interest-free loan.
What amount should be included immediately in the profit or loss on January 1, 2021?
A. NONE
B. 238,095
C. 464, 853
D. 680,815
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