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What is the carrying amount of the notes receivable

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Question - On December 31, 2020, Sid Company sold for P70,000 an old machine having an original cost of P90,000 and a book value of P40,000. The terms of the sale were as follows:

P10,000 down payment

P30,000 payable on December 31 each of the next two years

The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2020 rounded to the nearest PESO? (The present value of an ordinary annuity of 1 at 9% for 2 years is 1.75911.)

Required -

1. What is the gain on sale?

2. How much is the 2021 Interest income

3. What is the carrying amount of the notes receivable on December 31, 2020?

4. What is the carrying amount of the notes receivable on December 31, 2021?

5. What is the 2022 interest income?

Reference no: EM132749722

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