PRAISEWORTHY Company is a dealer in equipment. On January 1, 2020, PRAISEWORTHY Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are: PV of 1 at 8% for 5 periods 0.68 PV of an ordinary annuity of 1 at 8% for 5 periods 3.99 PV of an annuity due of 1 at 8% for 5 periods 4.31 What is the interest income to be recognized for the year ended December 31, 2020?

PRAISEWORTHY Company is a dealer in equipment. On January 1, 2020, PRAISEWORTHY Company sold an equipment with a cost of P3,500,000 in exchange for a noninterest bearing note of P5,000,000 requiring a lump sum payment at the end of 5 years. The market interest for similar notes was 8%. The relevant present value factors are: PV of 1 at 8% for 5 periods 0.68 PV of an ordinary annuity of 1 at 8% for 5 periods 3.99 PV of an annuity due of 1 at 8% for 5 periods 4.31 What is the interest income to be recognized for the year ended December 31, 2020?

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

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 14RE: On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment....

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