At what amount should be the note receivable from UUU Company be reported at year-end?
At year-end, GHI Co. received two P1,000,000 notes receivable from customers in exchange for services rendered. On both notes, interest is calculated on the outstanding principal balance at the annual rate of 3% and payable at maturity. The note from XXX Corp., made under customary trade terms, is due in nine months and the note from UUU Company is due in five years. The market interest rate for similar notes was 8%. The present value of 1 due in nine months is 0.944 and the present value of 1 due in five years is 0.68. The present value of annuity of 1 at 8% for five year is 3.9927. At what amount should be the note receivable from UUU Company be reported at year-end?
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