NOREEN INC, a truck dealer, sells a truck on January 1, 2019, to MENDOZA INC for P3,000,000. NOREEN agrees to repurchase the truck on December 31, 2020 for P3,630,000. 1. Assuming a 10% is imputed in the agreement, how

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 11P

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NOREEN INC, a truck dealer, sells a truck on January 1, 2019, to MENDOZA INC for P3,000,000. NOREEN agrees to repurchase the truck on December 31, 2020 for P3,630,000. 1. Assuming a 10% is imputed in the agreement, how much is the liability of NOREEN on January 1 ,2019 A 1,500,000 B. 1,815,000 C. 3,000,000 D. 3,630,000 2. Using the information above, what is the interest expense for 2019? A. None B300,000 C 330,000 D. 630,000 3. How much should NOREEN INC record interest and retirement of its liability to MENDOZA INC on December 31, 20207 A. None B. 300,000; 3,600,000 C. 330,000; 3,630,000 D. 630,000; 3,630,000

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