What is the amount of interest income

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Question - On January 1, 2021, San Jose Company sold property to Cabanatuan Company which originally cost San Jose P7,600,000. There was no established exchange price for this property. Cabanatuan gave San Jose a P12,000,000 zero- interest- bearing note payable in three equal annual installments of P4,000,000 with the first payment due on December 21, 2021. The Note has no ready market. The prevailing rate of interest for a Note of this type is 10%. The present value of a P12,000,000 note payable in three equal annual installments of P4,000,000 at a 10% rate of interest is P9,948,000. What is the amount of interest income that should be recognized by San Jose, using the effective- interest method?

Reference no: EM133171405

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