On January 1, 2020, The Corporation sold a piece of equipment that was acquired ten years ago for P350,000. At the time of sale, the equipment had an accumulated depreciation of P240,000. Corporation received a non-interest-bearing note for P300,000 in exchange for the equipment. The note is due on January 1, 2022. There is no readily available market value for the equipment, but the current market rate of interest for comparable notes is 12%. How much is the gain on sale of equipment in 2020 and the interest revenue in 2021, respectively? (PV of 1 at 12% for 2 periods is 0.7972; PV of ordinary annuity at 12% for 2 periods is 1.6901)

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
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On January 1, 2020, The Corporation sold a piece of equipment that was acquired ten years ago for P350,000. At the time of sale, the equipment had an accumulated depreciation of P240,000. Corporation received a non-interest-bearing note for P300,000 in exchange for the equipment. The note is due on January 1, 2022. There is no readily available market value for the equipment, but the current market rate of interest for comparable notes is 12%. How much is the gain on sale of equipment in 2020 and the interest revenue in 2021, respectively? (PV of 1 at 12% for 2 periods is 0.7972; PV of ordinary annuity at 12% for 2 periods is 1.6901)

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