On January 1, 2019, Sobiono company sold land to Gliezel company. There were no established market price for the land. Glieezel gave Sobiono a P4,800,000 noninterest bearing note payable in three equal annual installments of P1,600,000 with the first payment due December 31, 2019. The note has no ready market. The prevailing

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 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...

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Question

On January 1, 2019, Sobiono company sold land to Gliezel company. There were no established market price for the land. Glieezel gave Sobiono a P4,800,000 noninterest bearing note payable in three equal annual installments of P1,600,000 with the first payment due December 31, 2019. The note has no ready market. The prevailing rate of interest for a note of this type is 10%. The present value of a P4,800,000 note payable in three equal annual installments of P1,600,000 at a 10% rate of interest is P3,979,200. What is the carrying amount of the note payable on December 31, 2019?

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