The current portion of long-term notes receivable as of December 31, 2018 is . On January 1, 2018, San Vicente Company sold equipment with a carrying amount of P3,200,000 to Corba Company.As payment, Corba gave San Vicente Company a P8,000,000 note. The note bears an interest rate of 5% and is to berepaid in five annual installments of P1,600,000 (plus interest on the outstanding balance). The first payment wasreceived on December 31, 2018. The market price of the equipment is not reliably determinable. The prevailing rate ofinterest for notes of this type is 14%.QUESTIONS:Based on the above and the result of your audit, answer the following: (Round off present value factors to four decimal placesand final answers to nearest hundred) The San Vicente Company included the following in its notes receivable as of December 31, 2018:Note receivable from sale of landP1,760,000Note receivable from consultation2,400,000Note receivable from sale of equipment3,200,000In connection with your audit, you were able to gather the following transactions during 2018 and other informationpertaining to the company's notes receivable:• On April 1, 2018, San Vicente Company sold a tract of land. The land, purchased 10 years ago, was carried on SanVicente Company's books at a value of P1,000,000. San Vicente received a noninterest-bearing note for P1,760,000.The note is due on March 31, 2021. There is no readily available market value for the land, but the current market rateof interest for comparable notes is 14%.• On June 1, 2018, San Vicente Company finished consultation services and accepted in exchange a promissory note witha face value of P2,400,000, a due date of May 31, 2020, and a stated rate of 7%, with interest receivable every May 31of each year, beginning May 31, 2019. The fair value of the services is not readily determinable and the note is notreadily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of14%.C

The current portion of loan term debt represents the amount that will be received within 12 months…

• On January 1, 2018, San Vicente Company sold equipment with a carrying amount of P3,200,000 to Corba Company. As payment, Corba gave San Vicente Company a P8,000,000 note. The note bears an interest rate of 5% and is to be repaid in five annual installments of P1,600,000 (plus interest on the outstanding balance). The first payment was received on December 31, 2018. The market price of the equipment is not reliably determinable. The prevailing rate of interest for notes of this type is 14%.

• On January 1, 2018, San Vicente Company sold equipment with a carrying amount of P3,200,000 to Corba Company. As payment, Corba gave San Vicente Company a P8,000,000 note. The note bears an interest rate of 5% and is to be repaid in five annual installments of P1,600,000 (plus interest on the outstanding balance). The first payment was received on December 31, 2018. The market price of the equipment is not reliably determinable. The prevailing rate of interest for notes of this type is 14%.

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

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 15P: Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed...

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