Pisbol Company sold an equipment with a carrying amount of $750,000 on April 1,2020. Pisbol received a promissory note which bears an interest of 12% payable annually with a face value of $1,000,000. The principal is payable after 4 years from April 1,2020. The prevailing market rate of interest is 10%. (For present value factors, do not round off) How much is the interest income for year 2021 and carrying value of the notes as of December 31,2021?

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A:

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A: Impairment=Carrying value of loan-present value of cash flows

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A: When the loan is borrowed from the lender, the interest charge on the loan or the borrowed…

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A: Formulas:

Q: On december 31, 2020, Precious Company sold an equipment with carrying amount of 2,000,000 and…

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Q: A three-year note of P200,000 with contract rate of 10% received from Dilaw Corporation dated…

A: Interest income is the amount which is received for lending money and is calculated on the face…

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A: Present value: It is the value of investment that will be worth more than in future.

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A: Here discuss about the purchase of equipment which are first to paid the down payment of certain…

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A: Given: To explain the repossession and interest revenue as,

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A: Working note: Computation of fair value of note receivable on January 1, 2020:

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A: “Since you have asked multiple sub-parts, we will solve the first three sub-parts for you. If you…

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Q: On January 1, 2021, AST Company sold an inventory costing P110,000 for P150,000. A 10% down payment…

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A: Journal entry A journal entry is a record of the business transactions within the accounting books…

Q: What is the interest income for the year 2023? How much is the total proceeds of Squirtle for the…

A: Answer:

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A: Basic Accounting Concept  Sales of Assets in exchange of Note receivable Amortization of Loan…

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A: The carrying value of the note is calculated by discounting the future cash flows from the note at…

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Q: On January 1, 2022, State Co. sold an equipment to Nation Co. The latter issued a five-year…

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Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.