On January 1, 2026, SALVO COMPANY sells its equipment with a carrying value of P160,000. The company receives a non-interest-bearing note due in 3 years with a face amount of P200,000. There is no established market value for the equipment. The prevailing interest rate for a note of this type is 12%. The following are the present value factors of 1 at 12%: Present value of 1 for 3 periods 0.71178 Present value of an ordinary annuity of 1 for 3 periods 2.40183 15. The gain or loss on the sale of equipment is: 16. The discount on notes receivable is: 17. The entry to record the sale of equipment is:
On January 1, 2026, SALVO COMPANY sells its equipment with a carrying value of P160,000. The company receives a non-interest-bearing note due in 3 years with a face amount of P200,000. There is no established market value for the equipment. The prevailing interest rate for a note of this type is 12%. The following are the present value factors of 1 at 12%: Present value of 1 for 3 periods 0.71178 Present value of an ordinary annuity of 1 for 3 periods 2.40183 15. The gain or loss on the sale of equipment is: 16. The discount on notes receivable is: 17. The entry to record the sale of equipment is:
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
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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Question
On January 1, 2026, SALVO COMPANY sells its equipment with a carrying value of
P160,000. The company receives a non-interest-bearing note due in 3 years with a
face amount of P200,000. There is no established market value for the equipment.
The prevailing interest rate for a note of this type is 12%. The following are the
present value factors of 1 at 12%:
Present value of 1 for 3 periods 0.71178
Present value of an ordinary annuity of 1 for 3 periods 2.40183
15. The gain or loss on the sale of equipment is:
16. The discount on notes receivable is:
17. The entry to record the sale of equipment is:
18. The discount amortization at the end of the second year using the effective-
interest amortization is:
19. The entry to record the discount amortization is:
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