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What is carrying value of the note payable

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Problem 1 - On January 1, 2020, Lovely Company bought a new equipment. The entity paid P500,000 down and signed a two-year promissory note of P800,000 plus 10% interest compounded annually. The note matures on January 1, 2022.

a) What is the interest expense of 2021?

b) What is carrying value of the note payable (inclusive of accrued interest) on December 31, 2021?

Problem 2 - On April 1, 2020, Brave Company acquired a tract of land for P4,500,000. The entity paid P1,500,000 down and signed a promissory note for the balance plus a 12% interest. The note is payable in three equal installments beginning April 1, 2021. The first principal and interest payment was made on April 1, 2021.

a) What is the interest expense of 2021?

b) What is the carrying value of the note payable (inclusive of accrued interest on December 31, 2022?

Reference no: EM132868591

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