Reference no: EM133090115

Questions -

Q1. On December 31, 2020, Judges Company received two, P1,500,000 notes receivable from customers in exchange of services rendered. On both notes, interest is calculated on the outstanding principal balance at the annual rate of 4% and payable at the maturity. The note from Ruth Company, made under customary trade terms, is due eight months and the note from Samuel Company is due in five years. The market interest rate for similar notes on December 31, 2020 was 8%. Using two decimal places for the present value factors, what is the total carrying amount of the notes receivable on December 31, 2020?

Q2. On January 1, 2020, Kings Company sold land that originally cost P400,000 to Chronicles Corp. As payment, Chronicles gave Kings a P600,000 note. The note bears an interest rate of 14% and is to be repaid in three annual installments of P200,000 plus interest on the outstanding balance. The first payment is due on Dec. 31, 2020. The market price of the land is not reliably determinable. The prevailing interest rate for note of this type is 14%. How much is the total impact of the transaction on 2020's income statement?

Q6. On December 27, 2020, Ester Co. sold a building, receiving a consideration of P4,000,000 noninterest bearing note due in four years. The building had a cost of P4,800,000 and the accumulated depreciation was P2,300,000 at the date of sale. The prevailing market of interest for a note of this type was 12%. Use three decimal places for the present value factor. In the 2020 income statement, what amount of gain is to be reported related to the sale?