On May 1, 2022, Cuba Company purchased factory machinery having an installment price of P4,000,000. The company made a P1,000,000 down payment and issued 6-year, non-interest bearing note for the balance payable every May 1, starting next year. There is no cash equivalent price for the factory machinery. The prevailing interest rate for similar note is at 6%. The present value factor of P1 at 6% for 6 periods is at 0.7050 The present value factor of P1 ordinary annuity for 6 periods is at 4.9173 Assuming an estimated useful life of 9 years with a 10% salvage value based on cost, what is the book value of the factory machinery at December 31, 2022 under the sum-of-years digit method? A . 2,016,093 B. 2,163,612 C. 3,043,612 D. 2,836,093
On May 1, 2022, Cuba Company purchased factory machinery having an installment price of P4,000,000. The company made a P1,000,000 down payment and issued 6-year, non-interest bearing note for the balance payable every May 1, starting next year. There is no cash equivalent price for the factory machinery. The prevailing interest rate for similar note is at 6%. The present value factor of P1 at 6% for 6 periods is at 0.7050 The present value factor of P1 ordinary annuity for 6 periods is at 4.9173 Assuming an estimated useful life of 9 years with a 10% salvage value based on cost, what is the book value of the factory machinery at December 31, 2022 under the sum-of-years digit method? A . 2,016,093 B. 2,163,612 C. 3,043,612 D. 2,836,093
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 May 1, 2022, Cuba Company purchased factory machinery having an installment price of P4,000,000.
The company made a P1,000,000 down payment and issued 6-year, non-interest bearing note for the
balance payable every May 1, starting next year. There is no cash equivalent price for the factory
machinery. The prevailing interest rate for similar note is at 6%. The present value factor of P1 at 6% for 6 periods is at 0.7050
The present value factor of P1 ordinary annuity for 6 periods is at 4.9173
Assuming an estimated useful life of 9 years with a 10% salvage value based on cost, what is the book
value of the factory machinery at December 31, 2022 under the sum-of-years digit method?
A
.
2,016,093 B. 2,163,612 C. 3,043,612 D. 2,836,093
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