Good Company purchased a franchise on July 1, 2021 for the following considerations: The company paid P1,000,000 and issued 10,000 shares of its P100 par ordinary shares on July 1, 2021. The company's ordinary share is selling at this date at P130 per share. Issued a non-interest bearing note for P3,000,000 payable semi-annually for three years every June 30 and December 31. the first payment is due on Dec. 31, 2021. The Company’s credit rating indicates that it can borrow money at 8% per annum for a loan of this type. Information on present value factors (PV) are: PV of an ordinary annuity of 1 at 8% for 3 periods-----------2.5771 PV of an annuity due at 4% for 6 periods---------------------5.4518 PV of an ordinary annuity of 1 at 4% for 6 periods-----------5.2421 What is the cost of Franchise acquired on July 1, 2
Good Company purchased a franchise on July 1, 2021 for the following considerations: The company paid P1,000,000 and issued 10,000 shares of its P100 par ordinary shares on July 1, 2021. The company's ordinary share is selling at this date at P130 per share. Issued a non-interest bearing note for P3,000,000 payable semi-annually for three years every June 30 and December 31. the first payment is due on Dec. 31, 2021. The Company’s credit rating indicates that it can borrow money at 8% per annum for a loan of this type. Information on present value factors (PV) are:
PV of an ordinary annuity of 1 at 8% for 3 periods-----------2.5771
PV of an annuity due at 4% for 6 periods---------------------5.4518
PV of an ordinary annuity of 1 at 4% for 6 periods-----------5.2421
What is the cost of Franchise acquired on July 1, 2021?
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