On January 1, 2022, Colorado Company sold a machinery with an acquisition cost of P 1,000,000 and accumulated depreciation as of this date of P 550,000. As a consideration, it received a 5-year , P 500,000, 12% note from Alabama Company. The note requires the interest to be paid annually every December 31 starting December 31, 2022 until the maturity on December 31, 2026. The prevailing interest rate for a note of this type is 10%. Round off present value factors to four decimal places. QUESTION: No. QUESTIONS Your Answer 1. At what amount shall the note be initially measured on January 1, 2022? 2. What amount should be reported as gain (loss) on sale of machinery? 3. What amount of interest income should be reported for the year 2023? 4. What is the carrying amount of the note receivable on December 31, 2023?
On January 1, 2022, Colorado Company sold a machinery with an acquisition cost of P 1,000,000 and accumulated depreciation as of this date of P 550,000. As a consideration, it received a 5-year , P 500,000, 12% note from Alabama Company. The note requires the interest to be paid annually every December 31 starting December 31, 2022 until the maturity on December 31, 2026. The prevailing interest rate for a note of this type is 10%. Round off present value factors to four decimal places. QUESTION: No. QUESTIONS Your Answer 1. At what amount shall the note be initially measured on January 1, 2022? 2. What amount should be reported as gain (loss) on sale of machinery? 3. What amount of interest income should be reported for the year 2023? 4. What is the carrying amount of the note receivable on December 31, 2023?
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 15DQ
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Question
On January 1, 2022, Colorado Company sold a machinery with an acquisition cost of P 1,000,000 and
Round off present value factors to four decimal places.
QUESTION:
| No. | QUESTIONS | Your Answer |
| 1. | At what amount shall the note be initially measured on January 1, 2022? | |
| 2. | What amount should be reported as gain (loss) on sale of machinery? | |
| 3. | What amount of interest income should be reported for the year 2023? | |
| 4. | What is the carrying amount of the note receivable on December 31, 2023? |
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