On January 1, 2021, Nancy Company sold a tract of land that was acquired several years ago for P1,800,000. Nancy received a three-year, non-interest bearing note for P6,000,000 in exchange for the land. There is no readily available market value for the land, but the current market rate of interest for comparable notes is 15%. The note is payable in equal annual installments of P2,000,000 every December 31, starting December 31, 2021. Present value of an annuity of P1 for three periods at 15% is 2.2832. Explain how to get: Carrying value of the note at December 31, 2021.

On January 1, 2021, Nancy Company sold a tract of land that was acquired several years ago for P1,800,000. Nancy received a three-year, non-interest bearing note for P6,000,000 in exchange for the land. There is no readily available market value for the land, but the current market rate of interest for comparable notes is 15%. The note is payable in equal annual installments of P2,000,000 every December 31, starting December 31, 2021. Present value of an annuity of P1 for three periods at 15% is 2.2832. Explain how to get: Carrying value of the note at December 31, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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