ABC Corp acquired a lot by paying down payment of P400,000 and issued a non-interest bearing note of P1,800,000 on Jan 1. Note is due in three annual payments starting Dec 31. Effective rate is 9%
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1.
ABC Corp acquired a lot by paying down payment of P400,000 and issued a non-interest bearing note of P1,800,000 on Jan 1. Note is due in three annual payments starting Dec 31. Effective rate is 9%
How much should the land be initially recognized?
1,800,000
1,918,777
2,000,000
2,200,000
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Solved in 2 steps
- On January 1, 20x9, Fairness Company sold a tract of land that was acquired years ago for P 3,000,000. Fairness received a three year 15% interest bearing note for P 6,000,000 in exchange for the land, but the current market rate of interest for comparable notes is 10%. The note is payable in equal annual instalments of P 2,000,000 every December 31 starting December 31, 20x9. a. Compute for the carrying value of the note on January 1, 20x9b. Compute for the gain or loss on salec. Compute for the interest income recognized in 20x11.d. Compute for the carrying value of the note in December 31, 20x10e. Prepare all entries.On January 1, 20x9, Fairness Company sold a tract of land that was acquired years ago for P 3,000,000. Fairness received a three year non-interest bearing note for P 6,000,000 in exchange for the land, but the current market rate of interest for comparable notes is 10%. The note is payable in equal annual instalments of P 2,000,000 every December 31 starting December 31, 20x9. a. Compute for the carrying value of the note on January 1, 20x9b. Compute for the gain or loss on salec. Compute for the interest income recognized in 20x11.d. Compute for the carrying value of the note in December 31, 20x10e. Prepare all entries.On January 1, 2022, ABC Company buys three hectares of land for exactly P800,000 with the amount to be paid on December 31, 2024. Interest of 3% will be paid each December 31 although a 10 percent annual rate is viewed as reasonable. Use PV factors rounded to TWO decimal places.On December 31, 2022, at what amount should the company report as the liability for this land? On December 31, 2022, what amount of Discount on Notes Payable should be reported by ABC Company on its Statement of Financial Position? Prepare the journal entry on the payment of interest expense on December 31, 2022.
- 000 000 nd 12 t 7. On January 1, 20x1, Diminished Co. paid cash down payment of P400,000 and issued a noninterest bearing note of P1,800,000 in exchange for a piece of land. The note is due in three equal annual installments every December 31. Case 1: The land has a fair value of P2,000,000. Provide the entry on initial recognition. 10 79 Case 2: The fair value of the land cannot be determined reliably. The 10089 prevailing market rate of interest for similar debt instruments is 9%. Provide the journal entry on initial recognition and the entries for the subsequent payments on the note.1. Action Company acquired an investment property with an installment price of P2,500,000. The acquisition of the property requires a down payment of 20% and a non-interest bearing note payable at the end of each year for five years. The prevailing rate of interest for similar instrument is 12%. The present value of an annuity of 12% for four periods is 3.605. Action Company incurred transaction costs amounting to P45,000 for the property. What is the cost of acquiring the property?On June 1, 20x4, a tract of land that originally cost P 800,000 was sold to SHE Company. The company received a P 1,200,000 note as payment. It bears interest rate of 4% and is payable in 3 annual installments of P 400,000 plus interest on the outstanding balance. The prevailing interest rate for this type of note is 10%. The present value table shows the following present value factors of 1 at 10%. Present value factor of 1 for 3 periods 0.75132 Present value factor of 1 for 2 periods 0.82645 Present value factor of 1 for 1 period 0.90909 Present value factor of an ordinary annuity 1 for 3 periods 2.48685 How much interest income should be reported for 20x4?
- On January 1, 20x1, HYBE acquired a machine by using a 3%, P4,000,000 note due on January 1, 20x4. Interest is payable semi-annually. The effective interest rate is 12%. The carrying amount on initial recognition is 3,114,884. How to get the carrying amount on initial recognition?On January 1, 20x9, Detail Inc sold a tract of land that was acquired years ago for P 3M. Detail received a three year 10% interest bearing note for P 6M in exchange for the land, but the current market rate of interest for comparable notes is 10%. The note is payable in equal annual instalments of P 2M every December 31 starting December 31, 20x9. (Do not round your present factors but round off your final answers to 2 decimal places) Required: Compute for the carrying value of the note on January 1, 20x9 b. Compute for the gain or loss on sale c. Compute for the interest income recognized in 20x11. d. Compute for the carrying value of the note in December 31, 20x10 e. Prepare all entries. Expert AnswerOn January 1, 20x9, Fairness Company sold a tract of land that was acquired years ago for P 3M. Fairness received a three year non-interest bearing note for P 6M in exchange for the land, but the current market rate of interest for comparable notes is 10%. The note is payable in equal annual instalments of P 2M every December 31 starting December 31, 20x9. (Do not round your present factors but round off your final answers to 2 decimal places) Required: Compute for the carrying value of the note on January 1, 20x9 Compute for the gain or loss on sale Compute for the interest income recognized in 20x11. Compute for the carrying value of the note in December 31, 20x10 Prepare all entries.
- 2. Bob's Excavating purchased some equipment by issuing a three-year 6% note for $8,000 when the market rate for an obligation of this nature was 8%. The interest is payable annually. Actuarial information for three periods follows: 6% 8% 0.839619 0.793832 Present value of 1 2.673012 2.577097 Present value of annuity of 1 At the date of purchase, what amount should be debited to Equipment? a. $8,000.00 b. $7,587.66 c. $6,716.96 d. $6,350.66On January 1, 20x9, Fairness Company sold a tract of land that was acquired years ago for P 3M. Fairness received a three year non-interest bearing note for P 6M in exchange for the land, but the current market rate of interest for comparable notes is 10%. The note is payable in equal annual instalments of P 2M every December 31 starting December 31, 20x9. (Do not round your present factors but round off your final answers to 2 decimal places) Compute for the carrying value of the note in December 31, 20x10 Prepare all entries.On January 1, 20x1, Otters Co. received a 3-year, noninterest bearing note of P1,200,000 in exchange for equipment with historical cost of P2,000,000 and accumulated depreciation of P700,000. The note is due three equal annual installations beginning on January 1, 20x1 and every January 1 thereafter. The effective interest rate is 10% Requirements: a. Prepare the amortization table. b. How much is the interest income in 20x1? c. How much is the carrying amount of the receivable on Dec. 31, 20x1?