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What is the gain on sale of equipment to be recognized

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Question - On December 31, 2018, Beep Company sold used equipment with carrying amount of P2,000,000 in exchange for non-interest-bearing note of P5,000,000 requiring ten annual payments of P500,000. The first payment was made on December 31, 2019. The market interest for similar note was 12%. The PVF of an ordinary annuity of 1 at 12% is 5.65 for 10 periods.

1. What is the gain on sale of equipment to be recognized for 2018?

a. 825,000 c. 2,175,000

b. 3,000,000 d. 1,345,000

2. What amount should be recognized as interest income for 2019?

a. 300,000 c. 339,000

b. 319,800 d. 600,000

3. What is the carrying amount of the note receivable on December 31, 2019?

a. 2,325,000 c. 4,500,000

b. 2,825,000 d. 2,664,000

Reference no: EM132950252

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