On December 31, 2021, Purple Company sold a building, receiving as a consideration a P4,000,000 non-interest bearing note due in three years. The building costs P3,800,000 and the accumulated depreciation was P1,600,000 at the date of sale. The prevailing rate of interest for a note of this type was 12%. How much gain or loss should Purple report on the sale of the asset? 1,800,000 gain 988,776 gain 988,776 loss 647,121 gain

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On December 31, 2021, Purple Company
sold a building, receiving as a consideration a
P4,000,000 non-interest bearing note due in
three years. The building costs P3,800,000
and the accumulated depreciation was
P1,600,000 at the date of sale. The
prevailing rate of interest for a note of this
type was 12%.
How much gain or loss should Purple report
on the sale of the asset?
1,800,000 gain
988,776 gain
988,776 loss
647,121 gain
Transcribed Image Text:On December 31, 2021, Purple Company sold a building, receiving as a consideration a P4,000,000 non-interest bearing note due in three years. The building costs P3,800,000 and the accumulated depreciation was P1,600,000 at the date of sale. The prevailing rate of interest for a note of this type was 12%. How much gain or loss should Purple report on the sale of the asset? 1,800,000 gain 988,776 gain 988,776 loss 647,121 gain
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