On January 2, 2020, Zyrus Company sold equipment with a carrying amount of P480,000 in exchange for a P600,000 non-interest bearing note due January 2, 2023. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 2, 2020 was 10%. The present value of 1 of 10% in three periods is .75 while the present value of ordinary annuity of 1 of 10% in three periods is 2.49. 8. What is the interest income for December 31, 2021? 45,000 49,500 54,450 60,000 A. В. C. D. Computation: 600,00 x .75 = 450,000 x 10% = 45,000 9. December 31, 2021? A. В. C. D. Refer to the information in Question No. 8. What is the carrying value of the note on 600,000 450,000 544,500 495,000

On January 2, 2020, Zyrus Company sold equipment with a carrying amount of P480,000 in exchange for a P600,000 non-interest bearing note due January 2, 2023. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 2, 2020 was 10%. The present value of 1 of 10% in three periods is .75 while the present value of ordinary annuity of 1 of 10% in three periods is 2.49. 8. What is the interest income for December 31, 2021? 45,000 49,500 54,450 60,000 A. В. C. D. Computation: 600,00 x .75 = 450,000 x 10% = 45,000 9. December 31, 2021? A. В. C. D. Refer to the information in Question No. 8. What is the carrying value of the note on 600,000 450,000 544,500 495,000

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
Notes Receivable and Income On January 1, 2019, Pitt Company sold a patent to Chatham Inc. which had a carrying value on Pitts books of 10,000. Chatham gave Pitt a 60,000, non-interest-bearing note payable in five equal annual installments of 12,000 with the first payment due and paid on January 1, 2020. There was no established price for the patent, and the note has no ready market value. The prevailing rate of interest for a note of this type at January 1, 2019, is 12%. Required: 1. Prepare a schedule showing the income or loss before income taxes that Pitt should record for the years ended December 31, 2019 and 2020. Show supporting computations in good form. 2. Next Level If Pitt inadvertently failed to discount the note and instead recorded it at its gross value, what would be the effect on income or loss before income taxes for the year ended December 31, 2019?
On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.
Comprehensive Notes Receivable On January 1, 2019, Seaver Company sold land with a book value of 23,000 to Bench Company. Bench paid 15,000 down and signed a 15,000 non-interest-bearing note, payable in two 7,500 annual installments on December 31, 2019, and 2020. Neither the fair value of the land nor of the note is determinable. Benchs incremental borrowing rate is 12%. Later in the year, on July 1, 2019, Seaver sold a building to Hane Company, accepting a 2-year, 100,000 non-interest-bearing note due July 1, 2021. The fair value of the building was 82,644.00 on the date of the sale. The building had been purchased at a cost of 90,000 on January 1, 2014, and had a book value of 67,500 on December 31, 2018. It was being depreciated on a straight-line basis (no residual value) over a 20-year life. Required: 1. Prepare all the journal entries on Seavers books for January 1, 2019, through December 31, 2020, in regard to the Bench note. 2. Prepare all the journal entries on Seavers books for July 1, 2019, through July 1, 2021, in regard to the Hane note. 3. Prepare the notes receivable portion of Seavers balance sheet on December 31, 2019 and 2020.
On January 1, 2022, Parrot Company sold equipment with a carrying amount of P4,800,000 inexchange for a P6,000,000 noninterest-bearing note due January 1, 2025. There was noestablished exchange price for the equipment. The prevailing rate of interest for a similar notewas 10% and the present value of 1 at 10% for three periods is 0.75.1. How much is the Loss on Sale of equipment on January 1, 2022?2. What is the interest income on December 31, 2023?
On January 1, 2020, Akin Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest-bearing note due January 1, 2023. There was no established exchange price for the equipment. The prevailing rate of interest for a similar note was 10%. The present value of 1 at 10% for three periods is 0.75. 1. What amount should be reported as interest income for 2020? a. 600,000 b. 500,000 c. 450,000 d. 400,000 2. What amount should be reported as gain or loss on sale of equipment for 2020? a. 1,200,000 gain b. 2,700,000 gain c. 300,000 gain d. 300,000 loss
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On January 01, 2022, TGIF Company sold equipment costing P10,000,000 with accumulated depreciation of P5,500,000 in exchange for a P6,000,000 noninterest bearing note due in equal annual installments of P2,000,000 every December 31, 2022. There was no established exchange price for the equipment and the note had no ready market. The prevailing rate of interest for a note of this type at January 01, 2022 was 10%. What is the carrying amount of the note on December 31, 2022? (Round off the present value factors to 4 decimal places)
On January 1, 2019, Lithium Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest bearing note due January 1, 2022. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 1, 2019 was 10%. The present value of 1 at 10% for three periods is 0.75. 1. What amount should be reported as interest income for 2019?
On January 01, 2022, Legit Company sold equipment costing P10,000,000 with accumulated depreciation of P5,500,000 in exchange for a P6,000,000 noninterest bearing note due in equal annual installments of P2,000,000 every December 31, 2022. There was no established exchange price for the equipment and the note had no ready market. The prevailing rate of interest for a note of this type at January 01, 2022 was 10%. What is the carrying amount of the note on December 31, 2022?
On January 2, 2020, Janice Company sold equipment with a carrying amount of 400,000 in exchange for a 600,000 4-year non-interest-bearing note due January 2, 2024. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 2, 2020 was 10%. What is the carrying value of the note receivable as of December 31, 2022 Statement of Financial Position?
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?