What amount should be reported for jhonson company

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Reference no: EM132838225

On January 1, 2015, Jhonson Company sold equipment with a carrying amount of P4,800,000 in exchange for a P6,000,000 noninterest-bearing note due January 1, 2018 There was no established exchange price for the equipment.

  • The prevailing rate of interest for a note of this type was 10%. The present value of 1 at 10% for three periods is 0.75.

Problem 1: What amount should be reported as interest income for 2015?

a. 600,000

b. 500,000

c. 450,000

d. 400,000

Problem 2: What amount should be reported as gain or loss on sale of equipment for 2015?

a. 1,200,000 gain

b. 2,700,000 gain

c. 300,000 gain

d. 300,000 loss

Reference no: EM132838225

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