On December 31, 2017, Park Company sold used equipment with carrying amount of P2,000,000 in exchange for a noninterest bearing note of P5,000,000 requiring ten annual payments of P500,000. The first payment was made on December 31, 2018. The market interest for similar note was 12%. The present value of an ordinary annuity of 1 at 12% is 5.65 for ten periods and 5.33 for nine periods. What is the gain on sale of equipment to be recognized in 2017?

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A:

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A: This question deals with the calculation of interest income and carrying value of notes receivable.…

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A:

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A: The present value is the amount of the money received at time 0 or the current period.