On February 5, 2020, Diamond Company purchased a new machine on a deferred payment basis. A down payment of P100,000 and P250,000 four equal annual installments will be made every February 1, starting next February 1, 2021. The cash equivalent price of the machine is P950,000. The imputed discount rate is 6.83%. Diamond also incurred P30,000 in installation costs. How much should be capitalized as cost of the machine? 950,000 980,000 900,000 1,100,000

Q: On January 1, 2020, Aggie Company purchased a building for $65,000, making a cash down payment of…

A: Interest Expenses:- It is an amount which one pays over the principal amount of loan or mortgage…

Q: Gordon Company sold an equipment with a cost of P750,000 for an installment price of P1,000,000 on…

A: In case of default by the customer,  the entity can repossess the equipment. The entity needs to…

Q: LINDT Corporation manufactures and sells electrical generators. On May 31, 2020, it sold an…

A: Present value of Note =  Installments x present value of an ordinary annuity of 1 for three periods…

Q: On December 31, 2020, ABC Co. purchased a machine under a deferred payment contract where it is…

A: Present value of future payment can be calculated by applying the appropriate rate of interest or…

Q: August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300…

A: As per IAS 15 Revenue recognition  When distinct goods or services are provided at standalone…

Q: On January 1, Whispering Corporation issues a $140,000, 10-year non-interest-bearing note to Camden…

A: Journal entry - It refers to the process where the business transactions are recorded in the books…

Q: Blue Inc. has decided to purchase equipment from Central industries on January 2, 2022, to expand…

A: The non interest bearing note issued for the purchase of equipment will be recorded at face value…

Q: Blue Inc. has decided to purchase equipment from Central industries on January 2, 2022, to expand…

A: Given information Note issued for = $810,000 Number of years  = 5 years Interest rate  = 11%…

Q: On January 1, 2021, Dreamlover Corporation purchased equipment from Daydream Company for P3,600,000.…

A: Present value refers to the current value of all the cash flows which is to be received in the…

Q: On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments. The…

A: Cost of building:         Annual payment PV Factor at 9% Present Value Year 1 $44,000 0.91743…

Q: Ayayai Corporation bought a new machine and agreed to pay for it in equal annual installments of…

A: Given, Installment (P) = $5,570 Number of periods (n) = 10 Interest rate (r) = 0.08

Q: CCC Company sold an equipment with a cost of P750,000 for an installment price of P1,000,000 on…

A: Given: To explain the repossession and interest revenue as,

Q: Blue Inc. has decided to purchase equipment from Central industries on January 2, 2022, to expand…

A: Solution: Present value of note = $162,000 * PVA of $1 at 11% for 5 periods = $162,000 * 3.69590 =…

Q: On February 5, 2020, Diamond Company purchased a new machine on a deferred payment basis. A down…

A: Solution: Capitalized cost of machine = Cash equivalent price of machine + Installation cost

Q: On July 01, 2022, Honesty  Corporation sold a set of washing machine and a dryer for a total…

A: Interest is calculated on the amount outstanding at the end of each quarter.

Q: On January 1, 2020, Lily Co. sold machinery with historical cost of P6,000,000 and accumulated…

A: Working note: Computation of fair value of note receivable on January 1, 2020:

Q: On January 1, 2021, Jin Company sold equipment at a cost of P400,000           The consideration is…

A: Unearned interest income on January 1, 2021 = Total annual payments - Present value of notes

Q: On June 1, 2020, the Crocus Company began construction of a new manufacturing plant. The plant was…

A: As per accounting rule when an asset is under construction then all…

Q: On December 31, 2020, Pearl Limited acquired a machine from Pronghorn Corporation by issuing a…

A: The value of note is the calculated by discounting the amount payable at future date at appropriate…

Q: On December 30, 2021, Jack company purchased an aircraft from Jill Co. in exchange for a noninterest…

A: Answer to Question: Cost of the Machine is the Present Value of Non Interest bearing Note…

Q: On January 1, 2016, the Montgomery Company agreed to purchase a building by making six payments. The…

A: 1.

Q: Marin Inc. has completed the purchase of new Surface computers. The fair value of the equipment is…

A: Given: Fair value of equipment = $454,625 Down payment = $100,000 Semi annual payment = $57,107…

Q: On January 1, 2020, Aggie Company purchased a building for $65,000, making a cash down payment of…

A: Given, Cost of building = $65000 Cash down payment = $5000 Notes Payable = $65000-$5000=$60000…

Q: On January 1, 2020, Marigold, Inc. signed a fixed-price contract to have Builder Associates…

A: Capitalized interest:   Capitalized interest is an accounting practice required under the accrual…

Q: Prepare the journal entry at the end of the first year to record the payment and interest, assuming…

A: When asset is purchased against the non interest bearing note then purchase needs to record at the…

Q: Chippewas Inc. has decided to purchase equipment from Central Michigan Industries on January 2,…

A: Chippewas issues $ 800000 market interest rate = 12% installments = 5 each installment = 160000…

Q: ompany sold a machine with a cost of P500,000 and accumulated depreciation of P350,000 to Gee…

A: Notes receivables refer to the written form of promissory notes that provides the holder the…

Q: On February 1, 2020, M-Way took out a loan from State Bank for $300,000. It was a 2-year note at 5%…

A: Notes Payable: It is a written assurance to pay a specified sum of money at a future date as per the…

Q: On January 1, 2011, ABC Corporation bought a machine on P 600,000, 14% , 3-year, note payable. The…

A: Ans. B.  P 600,000

Q: In August 2020, Atlantic Corp, commits to selling 100 of its merchandise to Boy Co. for P30,000…

A: As per IAS 15 Revenue recognition  When distinct goods or services are provided at standalone…

Q: The Moustache Company is replacing most of the windows in its Alden factory by purchasing them under…

A: Interest expense for 2019 = face value of notes x rate of interest x period = $37,908,000 x 10% =…

Q: On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments. The…

A: Answer: Part 1: PV factor for deferred annuity = PVA factor, n = 6, i = 12% - PVA factor, n = 3, i =…

Q: cost of the machine.

A: Asset recognition refers to the expenditure that results in the economic benefits flow to the…

Q: On February 5, 2020, Diamond Company purchased a new machine on a deferred payment basis. A down…

A: Fixed assets means the asset which is used by company for many years to come for the purpose of…

Q: Leody Company purchased a machine on December 1, 2020 at an invoice price of P4,500,000 with terms…

A: Accumulated depreciation is the total amount of depreciation which is charged on the machine.…

Q: On February 5, 2020, Diamond Company purchased a new machine on a deferred payment basis. A down…

A: Fixed assets means the asset which is used by company for many years to come for the purpose of…

Q: On January 1, 2021, Beauty Company sold a machine with a cost of P500,000 and accumulated…

A:

Q: On January 1, 2021, Anna Company sold a piece of equipment to Banana Company with a cost of…

A: Basic Accounting Concept  Sales of Assets in exchange of Note receivable Amortization of Loan…

Q: On April 1, 2021, ABC CO. issued a 9% interest bearing note with a face amount of P 30,000,000 for…

A: Interest bearing note:   When a company purchases a fixed asset, it is very difficult to pay the…

Q: Windsor Company borrowed €1625000 from BankTwo on January 1, 2019, in order to expand its mining…

A:

Q: On December 31, 2020, ABC Co. purchased a machine under a deferred payment contract where it is…

A: Non-current assets: Non-current assets are the assets purchased not the purpose of resale. It's…

Q: On January 1, 2020, the Dolce Corporation issued a three-year, non-interest bearing note with face…

A: Given, effective interest rate = 12%, annual installments = P1,000,000, The land has an equivalent…

Q: A company expects to retire an existing machine at the end of 2024 and will replace it with a new…

A: The cost of a new machine in replacement decision is calculated as the difference between the…

Q: In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000…

A: The sale value original goods sold before modification eill not be changed. As it was given that the…

Q: february 5, 2020, diamond company purchased a new machine on a deferred payment basis. a down…

A: Installment+Downpayment=P11,00,000.. Installation costs:::P30,000... Interest…

Q: Hips Company purchased an asset with a list price of P130,000 to be delivered on July 1, 2021 with…

A: Since the asset is purchased on July 1, 2021, just half-year depreciation expense would be charged…

Q: In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000…

A: SOLUTION INITIAL CONTRACT AMOUNT =30000 MODIFICATION IN CONTRACT =21600 TOTAL CONTRACT AMOUNT AFTER…

Q: PRAISEWORTHY Company is a dealer in equipment. On January 1, 2020, PRAISEWORTHY Company sold an…

A: Present value of note = face value of note x PV of 1 at 8% for 5 periods = P3500000 x 0.68 =…

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.