In return for a plot of land on January 1st, 20x1, Diminished Co. made a cash down payment ofP400,000 and issued a P1,800,000 noninterest bearing note. The loan is payable on December31 in three equal yearly instalments.Case 1: The property is worth P2,000,000. On initial recognition, grant entrance.Case 2: It is impossible to estimate with accuracy what the land is worth. 9 percent is thecurrent market rate of interest for comparable debt securities. Give the journal entry for thenote's first acknowledgement as well as the entries for the note's subsequent payments.

A borrower pays interest on a loan based on a proportion of the principle (the amount borrowed). The…

In return for a plot of land on January 1st, 20x1, Diminished Co. made a cash down payment of P400,000 and issued a P1,800,000 noninterest bearing note. The loan is payable on December 31 in three equal yearly instalments. Case 1: The property is worth P2,000,000. On initial recognition, grant entrance.

In return for a plot of land on January 1st, 20x1, Diminished Co. made a cash down payment of P400,000 and issued a P1,800,000 noninterest bearing note. The loan is payable on December 31 in three equal yearly instalments. Case 1: The property is worth P2,000,000. On initial recognition, grant entrance.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 15RE: On January 1, Kilgore Inc. accepts a 20,000 non-interest-bearing, 5-year note from Dieland Company...

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