On January 1, 2019, VINX Corporation sold equipment costing P380,000 with accumulated depreciation of P160,000 on the date of sale. ABOD received as consideration for the sale, a P400,000, non-interest bearing note, due January 1, 2022. There was no established exchange price for the equipment and the note had no read market. The prevailing rate of interest for a note of this type at January 1, 2019 was 10%. The present value of 1 at 10% for three periods is 0.75. What is the note’s carrying amount at December 31, 2019?

On January 1, 2019, VINX Corporation sold equipment costing P380,000 with accumulated depreciation of P160,000 on the date of sale. ABOD received as consideration for the sale, a P400,000, non-interest bearing note, due January 1, 2022. There was no established exchange price for the equipment and the note had no read market. The prevailing rate of interest for a note of this type at January 1, 2019 was 10%. The present value of 1 at 10% for three periods is 0.75. What is the note’s carrying amount at December 31, 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

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

Section: Chapter Questions

Problem 28E: On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First...

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