On December 31, 2019, Magnet company sold for P 3,000,000 an old equipment having an original cost of P 5,400,000 and carrying amount of P 2,400,000. The term of the sale were P 600,000 down payment and P 800,000 payable each year on December 31of the next three years. The sale agreement made no mention of interest. However, 10% would be a fair rate for this type of transaction, PV of an ordinary annuity of 1 at 10% for 3 years- 2.48685 PV of 1 for years- 0.75132
On December 31, 2019, Magnet company sold for P 3,000,000 an old equipment having an original cost of P 5,400,000 and carrying amount of P 2,400,000. The term of the sale were P 600,000 down payment and P 800,000 payable each year on December 31of the next three years. The sale agreement made no mention of interest. However, 10% would be a fair rate for this type of transaction, PV of an ordinary annuity of 1 at 10% for 3 years- 2.48685 PV of 1 for years- 0.75132
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
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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