Problem 6-5 (AICPA Adapted) On January 1, 2021, Enigma Company sold an equipment costing P500,000 which had a carrying amount of P350,000, receiving a P125,000 down payment and, as additional consideration, a P400,000 noninterest bearing note due on January 1, 2024. 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 1, 2021 was 12%. The present value of 1 at 12% for chree periods is 0.7118.
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A: Solution: Fair value of note on Jan 1, 2021 = P800,000 * PV of 1 at 5% for 4th period = P800,000 *…
Q: On January 1, 2019, Kelly Company sold equipment with a carrying amount of P7, 000,000 in exchange…
A: Present value of the Note = Face value of the note x Present value factor Gain (loss) on the sale =…
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Q: On January 1, 2021, Jungkook Company sold equipment at a cost of P700,000 and accumulated…
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Q: Problem 2 Bella Company had an overdue 8% note payable to Marimar Bank at Php8,000,000 with acrrued…
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A: Interest income for 2021 = Present value of note x prevailing rate of interest x no. of months in…
Q: On January 1, 2021, CPA Corporation sold goods to IntAcc1 Company. IntAcc1 signed a…
A: Solution: Carrying amount of note receivable is based on the present value of annual payments based…
Q: On January 1, 2022. TGIG sold equipment with historical cost of P10,000,000 and accumulated…
A: Carrying amount of the Note = Present value of the annual instalments where, Present value of the…
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A:
Q: On January 1, 2019, Mariz Company acquired a tract of land for 21,000,000. The entity paid a…
A: Face value of Note = Cost of land - down payment = 21,000,000 - 5,000,000 = 16,000,000
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A: The correct answer is Option (c).
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A: No. of installment to be received = Face value of notes / annual installments Carrying amount of the…
Q: On January 01, 2021, CPA Company sold equipment costing P760,000 with accumulated depreciation of…
A: Solution: Present value of note on Jan 1, 2021 = P800,000 * PV of 1 at 5% for 4th period = P800,000…
Q: On January 1, 2020, Laguna Company sold equipment costing P836,000 with accumulated depreciation of…
A: Answer-66000rs.
Q: 2. On January 1, 2018, Hipolito Company has an overdue 8% note payable to First Bank at P8,000,000…
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Q: On January 1, 2021, Ott Company sold goods to Fox Company. Fox Company signed a noninterest-bearing…
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Q: On January 1 ,2020 ABC Company sold a building and received as consideration P1,000,000 cash and…
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Q: On Jan. 1, 20x4, Bernie Bird Co. sold a building, which had a carrying amount of P350,000, receiving…
A: Solution: As per given - On Jan. 1, 20x4, Bernie Bird Co. sold a building, which had a carrying…
Q: On January 1, 2019, DEXTER Company sold equipment with a carrying amount of P4,800,000 in exchange…
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Q: On May 1, 2021, BB received a 3-year, P1,200,000 note receivable due on April 30, 2024. The note was…
A: INITIAL RECOGNITION OF NOTE AS ON 1 MAY, 2021 = 1200000 * Present value annuity factor 7% for 3…
Q: On April 1, 2028, A Company issued a P 9,000,000 non-interest-bearing note due March 31, 2031, for a…
A: The interest expense is the amount of interest to be paid during the period.
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A: Present value of the note is calculated as 300,000 / ((1.13^2.5) * (1.12^0.5)) = 208,841.1782 The…
Q: 9. On January 2, 2020, GRAPES Company sold equipment with a carrying amount of P480,000 in exchange…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: On January 01, 2021, VKS Company sold equipment costing P760,000 with accumulated depreciation of…
A: Present value of the note on January 01, 2021 = Face value of the Note x PV factor (5%, 4 years) =…
Q: May I ask for an explanation and solution to the problem for a better understanding. Thank you! On…
A: Step 1 Non Interest bearing note is a debt for which there is no contractual requirement for the…
Q: Due to the covid-19 pandemic, TRUE has experienced extreme financial pressure and has been in…
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- 62.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, 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?49.On January 1, 2021, Suga Company sold an equipment to Jin Company which had a carrying value on Suga’s books of P100,000. Jin gave Suga a P600,000, non-interest bearing note, payable in five equal annual installment of P120,000 with the first payment due on December 31, 2021. There was no established price for the equipment and the note has no ready market value. The prevailing rate of interest for a similar note at January 1, 2021 was 12%. Present value (PV) factors for 5 periods at 12% are:PV of P1 - 0.5674PV of an ordinary annuity of P1 – 3.6048How much is the carrying amount (amortized cost) of the notes receivable at December 31, 2021?
- On January 01, 2021, VKS Company sold equipment costing P760,000 with accumulated depreciation of P320,000 on the date of sale. CPA received as consideration for the sale, a P800,000 noninterest-bearing note due January 1, 2025. 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 on January 01, 2021 was 5%. Using two decimal places for the present value (PV) factor, what is the note’s carrying amount on December 31, 2021?#6 On December 31, 2018, Note Co. is in financial difficulty and cannot pay a note due that day. It is a $3,000,000 note with $300,000 accrued interest payable to Piper, Inc. Piper agrees to accept from Note equipment that has a fair value of $1,450,000, an original cost of $2,400,000, and accumulated depreciation of $1,150,000. Note should recognize a gain or loss on the transfer of the equipment of A.) $0 B.) $200,000 gain C.) $300,000 gain D.) $950,000 lossOn January 01, 2021, The Company sold equipment costing P760,000 with accumulated depreciation of P320,000 on the date of sale. Company received as consideration for the sale, a P800,000 noninterest-bearing note due January 1, 2025. 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 on January 01, 2021 was 5%. Using two decimal places for the present value (PV) factor, what is the note’s carrying amount on December 31, 2021?
- 655. On December 31, 2010, Green Company finished consultation services and accepted inexchange a promissory note with a face value of P300,000, a due date of December 31, 2013,and a stated rate of 5%, with interest receivable at the end of each year. The fair value of theservices is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%The carrying amount of the note receivable as of December 31, 2020 isa. 262,694b. 247,920c. 300,000d. 273,953On January 1, 2021, Kongguksu Co. acquired an equipment by issuing two-year, noninterest bearing note amounting to P1,000,000. The prevailing interest rate of the note is 12%. Assuming the equipment has no cash price equivalent, how much is the cost of equipment? (Use 4-decimal places) a.1,000,000 b.1,690,050 c.P797,200 d.P800,00021. On January 1, 2019, Mariz Company acquired a tract of land for 21,000,000. The entity paid a 5,000,000 down payment and signed a non interest bearing note for the balance which is due on January 1, 2022. There was no established exchange price for the land and the note had no ready market. The prevailing interest rate for this type of note was 12%. The present value of 1 at 12% for 3 periods is .7118. What is the carrying amount of the notes payable on Dec. 31, 2019?
- On January 01, 2022, TGIF Company sold equipment costing 10,000,000 with accumulated depreciation of 5,500,000 in exchange for a 6,000,000 noninterest-bearing note due in equal annual installments of 2,000,000 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 on January 01, 2022, was 10%. What is the carrying amount of the note on December 31, 2022?On January 1, 2021, ABC Co. sold equipment with a carrying amount of P480,000 in exchange for a P600,000 non-interest-bearing note due January 1, 2024. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type at January 1, 2021 was 10%. The present value of 1 at 10% for three periods is 0.7513. How much is the carrying value of the note receivable as of December 31, 2021 statement of financial position? How much should Matnog Co. report as interest income in its 2021 profit or loss? How much should Matnog Co. report as loss on sale of equipment in its 2021 profit or loss?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?