Answered: Cancer Co. owned a track of land…

Cancer Co. owned a track of land costing P1,600,000 and sold the land for P2,000,000. The entity received a 3-year note for P2,000,000 plus interest of 6% compounded annually.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 67IIP

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Concept explainers

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.

Question

How much interest income should be recognized in the second year?

Cancer Co. owned a track of land costing P1,600,000 and sold the land for
P2,000,000. The entity received a 3-year note for P2,000,000 plus interest
of 6% compounded annually.
Your answer

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