3. What should be reported as noncurrent liability from this transaction at December 31, 2021 after adjusting entries are made assuming that the effective interest method is used?
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- What should be the balance of the Discount on Notes Payable account on the books of ABC Company at December 31, 2021 after adjusting entries are made assuming that the effective interest method is used? On January 1, 2021, ABC Company sold property to EFG Company. There was no established exchange price for the property, and EFG gave ABC a 11,000,000 non-interest bearing note payable in 5 equal annual installments of 400,000, with the first payment due December 31, 2021. The prevailing rate of interest for a note of this type is 10%. The present value of the note at 10% was n758,160 at January 1, 2021. What should be the balance of the Discount on Notes Payable account on the books of ABC Company at December 31, 2021 after adjusting entries are made assuming that the effective interest method is used? a.) 0 b.) 241,840 c.) 166,024 d.) 141,840 e.) none of the aboveOn January 01, 2021, CPA Company sold equipment costing P760,000 with accumulateddepreciation of P320,000 on the date of sale. CPA received as consideration for the sale, aP800,000 noninterest-bearing note due January 1, 2025. There was no established exchangeprice for the equipment and the note had no ready market. The prevailing rate of interest fora 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?On Jan. 1, 2021, Yumi Co. settled a P 1,000,000 loan payable with an unamortized discount of P 20,000 and accrued interest of P 90,000 by transferring to the lender old equipment with cost of P 3,000,000, accumulated depreciation of P 2,200,000 and fair value of P 900,000. How much gain on extinguishment of debt is to be recognized? a. P 270,000b. P 290,000c. P 250,000d. P 150,000
- On June 1, 2021, Oriole & Sons sold equipment to James Landscaping Service in exchange for a zero-interest bearing note with a face value of $112800, with payment due in 12 months. The fair value of the equipment on the date of sale was $97200. The amount of revenue to be recognized on this transaction in 2021 is $97200. $112800. $15600. $97200 sales revenue and $9100 interest revenue.On January 1, 2020, Allure Company sold an equipment with a carrying amount of P800,00, receiving a noninterest bearing note due in three years with a face amount of P1,000,000. There os no established market value for the equipment. The interest rate on similar obligations is 12%. The present value of 1 at 12% for three periods is .712. 1. What amount should be reported as gain or loss on the sale of equipment in 2020? a. 200,000 gain b. 200,000 loss c. 88,00 gain d. 88,00 loss 2. What amount should be reported as interest income for 2020? a. 288,000 b. 120,000 c. 96,000 d. 85,440 3. What is the carrying amount of note receivable on December 31, 2020? a. 559,600 b. 712,000 c. 797,440 d. 800,000 4. What amount should be reported as interest income for 2021? a. 95,693 b. 96,000 c. 75,000 d. 60,000In 2019, Bright Inc. sold its parking lot for P2,400,000 payable on installment. The lot was previously acquired for P1,500,00. The buyer has an outstanding unpaid balance of P1,800,000 as of December 31, 2019, Bright’s year end. Compute Bright’s Gross income on 2019 using the installment method. a. P900,000 b. P675,000 c. P225,000 d. P112,500
- On December 31, 2020, Fang Corp. is in financial difficulty and cannot pay a $ 910,000 note with $ 91,000 accrued interest payable to AJ Ltd., which is now due. AJ agrees to accept from Fang an equipment that has a fair value of $ 445,000, an original cost of $ 720,000, and accumulated depreciation of $ 345,000 1. Record the journal entries in Fang corporation's booksKingbird Corp. sells idle machinery to Enyart Company on July 1, 2020, for $46,000. Kingbird agrees to repurchase this equipment from Enyart on June 30, 2021, for a price of $49,680 (an imputed interest rate of 8%). (a) Prepare the journal entry for Kingbird for the transfer of the asset to Enyart on July 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit eTextbook and MediaOn January 1, 2019, Format Company sold a tract of land that was acquired several years ago forP2,800,000. Format received a non-interest bearing note for P4,500,000 due on December 31,2021 inexchange for the land. There is no readily available fair value for the land, but the current market rate ofinterest for comparable notes is 8%. (Round present value factors to 4 decimal places.Required:(a) What are the amounts of interest revenue recognized in Format’s profit and loss for the years 2019and 2020?(b) What is the carrying value of the note at December 31,2019 and at December 31,2020?(c) How would the note receivable be classified on the statement of financial position at December31,2019 and at December 31,2020?
- On January 1,2021, XYZ Corporation purchased a land for P 15,000,000. In exchange of the land, ABC issued a non-interest bearing note which is due on December 31,2025. There is no readily available market value for the building, but the current market rate of interest for comparable notes is 15% How much should be presented as non-current liabilities in the notes payable balance as of December 31,2021 in the statement of financial position?On January 1, 20x1, an entity has an outstanding note payable with carrying amount of P1,000,000. On this date, the debtor agrees to receive equipment with historical cost of P1,800,000, accumulated depreciation of P900,000 and fair value of P850,000 in full settlement of the note payable. Requirement: Compute for the gain or loss on the derecognition of the note payable.Bonita Corp. sells idle machinery to Enyart Company on July 1, 2020, for $38,000. Bonita agrees to repurchase this equipment from Enyart on June 30, 2021, for a price of $39,900 (an imputed interest rate of 5%). (a) Prepare the journal entry for Bonita for the transfer of the asset to Enyart on July 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit
