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Compute the initial measurement of the note

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Question - On January 1, 2021, Alen Company purchased a piece of land and in exchange issued a 5-year, P1,200,000 face value noninterest bearing note. The fair value of the land and the market value of the note is not determinable. The prevailing interest rate for a similar transaction is 8%.

Required -

1. Compute the initial measurement of the note?

2. Compute the interest expense to be reported in the 2021 income statement?

3. Compute the carrying value of the note at December 31, 2022?

Reference no: EM133109373

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