How much is the liability of NOREEN on January

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Question - NOREEN INC, a truck dealer, sells a truck on January 1, 2019, to MENDOZA INC for P3,000,000. NOREEN agrees to repurchase the truck on December 31, 2020 for P3,630,000.

1. Assuming a 10% is imputed in the agreement, how much is the liability of NOREEN on January 1, 2019?

A. 1,500,000

B. 1,815,000

C. 3,000,000

D. 3,630,000

2. Using the information above, what is the interest expense for 2019?

A. None

B. 300,000

C. 330,000

D. 630,000

3. How much should NOREEN INC record interest and retirement of its liability to MENDOZA INC on December 31, 2020?

A. None

B. 300,000; 3,600,000

C. 330,000; 3,630,000

D. 630,000; 3,630,000

Reference no: EM133030458

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