On January 1,2021, Mickey Mouse Corp sells a Furniture and Fixtures costing P1,200,000 and with accumulated depreciation of P550,000 as of January 1,2021. The company receives 5-year, P500,000, 12% note. The stated interest in unrealistic since the prevailing rate of interest for a note of this type is 14%. How much is the interest income to be recognized in December 31, 2022? 65,196 65,923 66,753 67,698

On January 1,2021, Mickey Mouse Corp sells a Furniture and Fixtures costing P1,200,000 and with accumulated depreciation of P550,000 as of January 1,2021. The company receives 5-year, P500,000, 12% note. The stated interest in unrealistic since the prevailing rate of interest for a note of this type is 14%. How much is the interest income to be recognized in December 31, 2022? 65,196 65,923 66,753 67,698

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...

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On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000
On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment. Neither the fair value of the note nor the equipment is determinable. Boaters incremental borrowing rate is 9%. The asset has a useful life of 7 years. Prepare the journal entry for Boater to record the issuance of the note on January 1.
Notes Receivable and Income On January 1, 2019, Pitt Company sold a patent to Chatham Inc. which had a carrying value on Pitts books of 10,000. Chatham gave Pitt a 60,000, non-interest-bearing note payable in five equal annual installments of 12,000 with the first payment due and paid on January 1, 2020. There was no established price for the patent, and the note has no ready market value. The prevailing rate of interest for a note of this type at January 1, 2019, is 12%. Required: 1. Prepare a schedule showing the income or loss before income taxes that Pitt should record for the years ended December 31, 2019 and 2020. Show supporting computations in good form. 2. Next Level If Pitt inadvertently failed to discount the note and instead recorded it at its gross value, what would be the effect on income or loss before income taxes for the year ended December 31, 2019?
Comprehensive Notes Receivable On January 1, 2019, Seaver Company sold land with a book value of 23,000 to Bench Company. Bench paid 15,000 down and signed a 15,000 non-interest-bearing note, payable in two 7,500 annual installments on December 31, 2019, and 2020. Neither the fair value of the land nor of the note is determinable. Benchs incremental borrowing rate is 12%. Later in the year, on July 1, 2019, Seaver sold a building to Hane Company, accepting a 2-year, 100,000 non-interest-bearing note due July 1, 2021. The fair value of the building was 82,644.00 on the date of the sale. The building had been purchased at a cost of 90,000 on January 1, 2014, and had a book value of 67,500 on December 31, 2018. It was being depreciated on a straight-line basis (no residual value) over a 20-year life. Required: 1. Prepare all the journal entries on Seavers books for January 1, 2019, through December 31, 2020, in regard to the Bench note. 2. Prepare all the journal entries on Seavers books for July 1, 2019, through July 1, 2021, in regard to the Hane note. 3. Prepare the notes receivable portion of Seavers balance sheet on December 31, 2019 and 2020.
On January 1,2021, Mickey Mouse Corporation sells a Furniture and Fixtures costing P2,500,000 and with accumulated depreciation of P1,200,000 as of January 1,2021. The company receives 3-year, P900,000 note. The note is a non-interest bearing note and the prevailing rate of interest for a note of this type is 10% and the principal amount of the note is to be paid in the three equal annual installments of P300,000 every end of December 31. How much is the interest income for the year ended December 2021? Zero 90,000 74,601 52,061
23 On May 1, 2021, BB received a 3-year, P1,200,000 note receivable due on April 30, 2024. The note was received upon sale of an old machinery of BB which is no longer use in its operation. The interest effective of similar note is at 7%. Statement 1: The carrying value of the note as of December 31, 2022 is P1,097,039. Statement 2; The interest income for the period ending December 31, 2022 is P71,770. Group of answer choices Only statement 2 is true Both statements are true Only statement 1 is true Both statements are false
. Carson Company borrowed P3,600,000 from a bank evidenced by a non-interest-bearing note due in five years. At the 12% imputed interest rate for this type of loan, the present value of the note is P2,550,000 on January 1, 2020. What interest expense should be reported in 2020? Group of answer choices P306,000 P350,000 P432,000 P0
On January 1, 2020, Lily Co. sold machinery with historical cost of P6,000,000 and accumulated depreciation of P2,500,000 in exchange for a 3-year, 6%, P3,000,000 note receivable. Principal is due January 1, 2023 but interests are due semi-annually every December 31. The effective interest rate for this type of note is 10%. How much is the interest income in 2022?
On January 1, 2019, ABC Company sold an equipment with carrying amount of P1,500,000. The customer issued a 5-year P2,000,000, 10% interest bearing note as a payment for equipment sold. The principal of the note is payable on January 2,2024 and interest is payable annually at the end of the year. The effective interest for this note is 12%. 68)How much is the present value of note on January 1,2021? а. 1,134,854 b. 1,925,809 с. 1,241,842 d. 2,000,000 69) How much is the gain or loss on sale of equipment? а. 365,146 gain b. 365,146 loss c. 425,809 gain d. 500,000 gain e. 258,158 loss 70)How much is the carrying amount of note on December 31,2021? а. 1,956,106 b. 1,271,036 c. 1,071,036 d. 1,190,863 е. 2,040,000
On January 1, 2020, South Company purchased five delivery trucks for P 10,000,000 from West Company.South Company gave West Company 1 year non-interest bearing note (stated interest/nominal interest rate is 0) payable on January 1, 2021. At the date of purchase, the interest rate for this type of purchase is 13%. Round present value factors to four decimal places. Prepare an amortization table. Required: 1. What is the amount of Notes Payable that shall be reflected in the statement of financial position on December 31, 2020?______________ 2. What is the interest expense that shall be reported in the statement of financial performance on December 31, 2020?____________________
What is the carrying amount of the note as of December 31, 2022? On January 1, 2022. TGIG sold equipment with a historical cost of P10,000,000 and accumulated depreciation of P5,500,000 in exchange for a P6,000,000 non-interest-bearing note due in annual installments as follows: December 31. 2022 - 3, 000, 000 December 31, 2023 - 2, 000, 000 December 31 2024 - 1, 000, 000 There was no exchange price for the equipment. The prevailing rate of interest for a note of this type on January 1, 2022, was 10%. (Round off present value factors to four decimal places.
On January 1, 2018, Apple Company sold delivery equipment costing P1,000,000 with accumulated depreciation of P150,000 in exchange for a 3-year, P1,800,000 noninterest bearing note receivable due on December 31, 2020. The prevailing market rate of interest for this type of note is 12%. How much is the gain or loss on sale of delivery equipment in 2018?