On January 1, 2019, Lithium Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest bearing note due January 1, 2022. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 1, 2019 was 10%. The present value of 1 at 10% for three periods is 0.75. 1. What amount should be reported as interest income for 2019?

On January 1, 2019, Lithium Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest bearing note due January 1, 2022. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 1, 2019 was 10%. The present value of 1 at 10% for three periods is 0.75. 1. What amount should be reported as interest income for 2019?

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 3MC: On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9%...

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