Reference no: EM132867191
On January 1, 2020 the ABC Corporation issued a three-year, non-interest bearing note with a face value of P6,000,000 for a piece of equipment from DEF Corporation. The note is payable in annual installments of P2,000,000 every December 31, starting on December 31, 2020. The land had an equivalent cash price of P4,803,600.
Problem 1: What is the effective rate of interest?
Problem 2: What is the interest expense and discount amortization, respectively for the year ended December 31, 2020?
Problem 3: How much of the notes payable, net of the discount, should be reported as part of current liabilities and non-current liabilities, respectively as of December 31, 2020?
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