On January 1, 2017, Emme Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest bearing note due January 1, 2020. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 1, 2017 was 10%. The present value of 1 at 10% for three periods is 0.75. What amount should be reported as gain or loss on sale of equipment

On January 1, 2017, Emme Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest bearing note due January 1, 2020. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 1, 2017 was 10%. The present value of 1 at 10% for three periods is 0.75. What amount should be reported as gain or loss on sale of equipment

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 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...

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On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000
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