The note shall be paid in equal annual installments (this is the series of amounts that Krisha will receive in the future) every year end amounting P100,000/year. The prevailing interest rate for this type of note is 12%

The note shall be paid in equal annual installments (this is the series of amounts that Krisha will receive in the future) every year end amounting P100,000/year. The prevailing interest rate for this type of note is 12%

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 18DQ

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Question

Assume that on January 1 of the current year, Krisha Corporation sold its property costing P500,000 for P700,000 to Daniela Corporation. Daniela paid P200,000 as down payment and the balance was paid with a non-interest bearing note for P500,000. The note shall be paid in equal annual installments (this is the series of amounts that Krisha will receive in the future) every year end amounting P100,000/year. The prevailing interest rate for this type of note is 12%. You have been tasked by Krisha Corporation to compute present value of the note receivable to be recognized by the company.

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