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What amount should be reported as interest income

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Question - On January 2, 2020, Alaska Co. sold equipment with a carrying amount of P480,000 in exchange for a P600,000 noninterest-bearing note due January 2, 2023. There was no established exchange price for the equipment. The prevailing rate of interest for a note of this type on January 2, 2020, was 10%.

Required -

1. In Alaska's 2020 income statement, what amount should be reported as interest income?

2. In Alaska's 2020 income statement, what amount should be reported as gain (loss) on sale of machinery?

Reference no: EM133165893

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