book value of P60,000, the term of the sale were as follows: P120,000 down payment P120,000 payable on December 31 each of the next three years The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of Transaction. What should be the amortized cost of the note receivable on December 31,2022? P211,093 P110,092 P303,755 P360,000

book value of P60,000, the term of the sale were as follows: P120,000 down payment P120,000 payable on December 31 each of the next three years The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of Transaction. What should be the amortized cost of the note receivable on December 31,2022? P211,093 P110,092 P303,755 P360,000

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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On December 31, 2019, Univ Corporation sold for 50,000 an old machine having an original cost of 90,000 and a book value of 40,000. The terms of the sale were as follows: 10,000 down payment 20,000 payable on December 31 each of the next two years The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2020 rounded to the nearest dollar? (Round your present value factor to 5 digits).
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.
On January 1, 2023, Hornets Company sold land that originally cost P400,000 to the Egi Company. As payment, Egi gave Hornets a P600,000 note. The note bears an interest rate of 8% and is to be repaid in three annual installments of P200,000 plus interest on the outstanding balance. The first payment is due on December 31, 2023. The market price of the land is not reliably determinable. The prevailing interest rate for notes of this type is 8%. Question:31. How much is the interest revenue for the year 2023? A. P67,217B. P57,643C. P51,250D. P48,000
On January 1, 2023, Hornets Company sold land that originally cost P400,000 to the Egi Company. As payment, Egi gave Hornets a P600,000 note. The note bears an interest rate of 8% and is to be repaid in three annual installments of P200,000 plus interest on the outstanding balance. The first payment is due on December 31, 2023. The market price of the land is not reliably determinable. The prevailing interest rate for notes of this type is 8%. Question:32. Using the assumption of No. 30 (which is 12% interest rate for notes instead of 8%), what is the amortized cost of the note receivable at December 31, 2023? A. P600,000B. P400,000C. P379,355D. P290,003
On January 1, 2023, Hornets Company sold land that originally cost P400,000 to the Egi Company. As payment, Egi gave Hornets a P600,000 note. The note bears an interest rate of 8% and is to be repaid in three annual installments of P200,000 plus interest on the outstanding balance. The first payment is due on December 31, 2023. The market price of the land is not reliably determinable. The prevailing interest rate for notes of this type is 8%. Question:28. How much is the gain on the sale of land? A. P400,000B. P200,000C. P103,105D. P66,667
On January 1, 2023, Hornets Company sold land that originally cost P400,000 to the Egi Company. As payment, Egi gave Hornets a P600,000 note. The note bears an interest rate of 8% and is to be repaid in three annual installments of P200,000 plus interest on the outstanding balance. The first payment is due on December 31, 2023. The market price of the land is not reliably determinable. The prevailing interest rate for notes of this type is 8%. Question:30. Assume the same facts given in the problem, but change the prevailing interest rate for notes of this type to 12% (instead of 8%). At how much should the note be recorded on January 1, 2023? A. P600,000B. P560,138C. P480,360D. P427,080
On January 1, 2020, Pedro Company sold land that originally cost P400,000 to Buyer Company. As payment, Buyer gave Pedro Company a P600,000 note. The note bears an interest rate of 4% and is to be repaid in three annual installments of P200,000 (plus interest on the outstanding balance). The first payment is due on December 31, 2020. The market price of the land is not reliably determinable. The prevailing rate of interest for notes of this type is 14% on January 1, 2020 and 15% on December 31, 2020. Pedro made the following journal entries in relation to the sale of land and the related note receivable: January 1, 2020 Notes receivable. P600,000 Land P400,000 Gain on sale of land 200,000 December 31, 2020 Cash P224,000 Notes receivable P200,000 Interest income 24,000 Pedro reported the notes…
On January 1, 2020, Pedro Company sold land that originally cost P400,000 to Buyer Company. As payment, Buyer gave Pedro Company a P600,000 note. The note bears an interest rate of 4% and is to be repaid in three annual installments of P200,000 (plus interest on the outstanding balance). The first payment is due on December 31, 2020. The market price of the land is not reliably determinable. The prevailing rate of interest for notes of this type is 14% on January 1, 2020 and 15% on December 31, 2020. Pedro made the following journal entries in relation to the sale of land and the related note receivable: January 1, 2020 Notes receivable. P600,000 Land P400,000 Gain on sale of land 200,000 December 31, 2020 Cash P224,000 Notes receivable P200,000 Interest income 24,000 Pedro reported the notes…
On December 31, 2014, Swan Company sold for $150,000 an old machine having an original cost of $170,000 and a book value of $120,000. The terms of the sale were as follows: $30,000 down payment $60,000 payable on December 31 each of the next two years The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2014 rounded to the nearest dollar? (The present value of an ordinary annuity of 1 at 9% for 2 years is 1.75911.) a $135,546. b $120,000. c $211,092. d $105,546.
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On January 1, 2021, Moo Company sold an asset with a carrying amount of P6,000,000 to Boo Company for P8,000,000. The asset had a fair value of P7,500,000 and a remaining useful life of six years. The asset was immediately leased back to Moo Company for a term of four years and annual rentals of P1,500,000 payable every yearend. The transfer qualified for as a sale and the lease was accounted for as a finance lease with an implicit interest rate of 12%. How much is the 2021 net income/loss of Moo Company relating to the sale and leaseback transaction? [Indicate whether it is a gain or loss] How much is the 2021 net income/loss of BooCompany relating to the sale and leaseback transaction? [Indicate whether it is a gain or loss] How much is the carrying amount of Moo Company's asset as of yearend 2021? How much is the 2022 net income/loss of Moo Company relating to the sale and leaseback transaction? [Indicate whether it is a gain or loss] How much is the 2022 net income/loss of Boo…
On July 1, 2020, Agincourt Inc. made two sales. 1. It sold land having a fair value of $700,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,101,460. The land is carried on Agincourt’s books at a cost of $590,000. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $400,000 (interest payable annually). Agincourt Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest. Instructions Record the two journal entries that should be recorded by Agincourt Inc. for the sales transactions above that took place on July 1, 2020.