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How much is the carrying amount of the note

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Q1. On January 01, 2015, Hack Oil Company sold equipment with a carrying amount of P 1,000,000 and a remaining useful life of 10 years to Maco Company for P 1,500,000. Hack immediately leased the equipment back under a 10-year finance lease with a present value of P 1,500,000 and will depreciate the equipment using the straight line method.

Hack made the first annual lease payment of P 244,120 on December 31, 2015. The implicit interest rate in the lease is 10%. In Hack's December 31, 2015 statement of financial position, what amount should be reported as unearned gain on equipment sale?

a. 500,000 c. 255,880

b. 450,000 d. 0

Q2. On January 1, 20x1, ABC Co. issued a 1,200,000 noninterest-bearing note due on December 31, 20x1 in exchange for inventory with a list price of 1,100,000 and a cash price of 1,000,000. How much is the carrying amount of the note on December 31, 20x1?

a. 987,234

b. 1,000,000

c. 1,062,695

d. 1,129,321

Reference no: EM132950691

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