Zephyr Company is provided a grant by a foreign government for the purpose of acquiring land for a building site. The grant is a zero-interest loan for 5 years evidenced by a promissory note. The loan was granted on January 1, 2020 for P8,000,000. The market rate of interest is 6%. The present value of 1 for five periods at 6% is .7473. Assume that interest expense and grant income are not offset against each other, determine: 1.) Amount of interest expense reported in 2022 2.) Amount of grant income realized in 2023 3.) Amount of deferred grant income as of December 31, 2024
Zephyr Company is provided a grant by a foreign government for the purpose of acquiring land for a building site. The grant is a zero-interest loan for 5 years evidenced by a promissory note. The loan was granted on January 1, 2020 for P8,000,000. The market rate of interest is 6%. The present value of 1 for five periods at 6% is .7473. Assume that interest expense and grant income are not offset against each other, determine: 1.) Amount of interest expense reported in 2022 2.) Amount of grant income realized in 2023 3.) Amount of deferred grant income as of December 31, 2024
Chapter15: Property Transactions: Nontaxable Exchanges
Section: Chapter Questions
Problem 46P
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Zephyr Company is provided a grant by a foreign government for the purpose of
acquiring land for a building site. The grant is a zero-interest loan for 5 years
evidenced by a promissory note. The loan was granted on January 1, 2020 for
P8,000,000. The market rate of interest is 6%. The present value of 1 for five periods
at 6% is .7473.
Assume that interest expense and grant income are not offset against each other, determine:
1.) Amount of interest expense reported in 2022
2.) Amount of grant income realized in 2023
3.) Amount of deferred grant income as of December 31, 2024
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