rporation entered into a 20 year franchise that allows ZZ Corporation the right to use its intellectual property. As part of the standard contract, ZZ gave P500,000 as down payment and a P2,000,000 note that requires equal annual payments over ten years. The down payment is for the supporting assets (equipment and inventory) with total dost of P300,000 and stand-along price of P500,000 to GHI. The prevailing market interest rate of similar notes is 9%. GHI is also to receive royalty of 3% of ZZ's revenue each year end. ZZ earned revenues of P10,000,000 during the first year. What is the Interest revenue for the first ye
rporation entered into a 20 year franchise that allows ZZ Corporation the right to use its intellectual property. As part of the standard contract, ZZ gave P500,000 as down payment and a P2,000,000 note that requires equal annual payments over ten years. The down payment is for the supporting assets (equipment and inventory) with total dost of P300,000 and stand-along price of P500,000 to GHI. The prevailing market interest rate of similar notes is 9%. GHI is also to receive royalty of 3% of ZZ's revenue each year end. ZZ earned revenues of P10,000,000 during the first year. What is the Interest revenue for the first ye
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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GHI Corporation entered into a 20 year franchise that allows ZZ Corporation the right to use its intellectual property. As part of the standard contract, ZZ gave P500,000 as down payment and a P2,000,000 note that requires equal annual payments over ten years. The down payment is for the supporting assets (equipment and inventory) with total dost of P300,000 and stand-along price of P500,000 to GHI. The prevailing market interest rate of similar notes is 9%. GHI is also to receive royalty of 3% of ZZ's revenue each year end. ZZ earned revenues of P10,000,000 during the first year.
What is the Interest revenue for the first year?
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