Reference no: EM132577930

On January 1, 2015, Las Vegas Company purchased specialized machinery with a cash equivalent price of P59, 737. Las Vegas signed a deferred payment contract that calls for P10, 000 down payment and a 3-year note for P49, 737. The note is payable in 3 equal annual payments of P20, 000 beginning December 31, 2015. The annual payment includes 10% interest.

Question i: How much are the (1) interest expense for the year ended December 31, 2015 and the (2) carrying amount of the note payable at December 31, 2015?

Option a. (1) Interest expense - P 4,974 ; (2) Carrying amount - P 34,711

Option b. (1) Interest expense - P 4,974 ; (2) Carrying amount - P 44,711

Option c. (1) Interest expense - P 5,974 ; (2) Carrying amount - P 34,711

Option d. (1) Interest expense - P 5,974 ; (2) Carrying amount - P 44,711