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Assignment 2.2 Notes Receivable

The document discusses three cases involving the sale of assets in exchange for notes receivable. For each case, it provides details of the transaction and asks questions about gain/loss calculation, interest income, carrying amounts, and current and noncurrent portions of the receivable. Amortization tables are required to be prepared for each case.

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Hannah Nolong
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9K views

Assignment 2.2 Notes Receivable

The document discusses three cases involving the sale of assets in exchange for notes receivable. For each case, it provides details of the transaction and asks questions about gain/loss calculation, interest income, carrying amounts, and current and noncurrent portions of the receivable. Amortization tables are required to be prepared for each case.

Uploaded by

Hannah Nolong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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1.

Interest Bearing Note with Unrealistic Interest Rate (Lumpsum)


On January, 1, 2016, Jima Co. sold office equipment with a cost of P1,000,000 and accumulated depreciation of P150,000 in ex
Based on the above data, answer the following in each independent cases: (Prepare amortization table)

Face Amount 2,000,000


Multiply 0.7118 1,423,600
Add: Present value of interest 480,360
(2,000,000x10%x2.4018)
Total 1,903,960
Less: Cost 1,000,000
Accumulated Depreciation -150,000 850,000
Gain 1,053,960

Date Interest collection


1/1/2016
12/31/2016 200,000
12/31/2017 200,000
12/31/2018 200,000

a. Gain or Loss in selling the assets 1,053,960


b.Interest Income for December 31, 2016 228,475
c. Carrying Amount for December 31, 2016 1,932,435
d. Current and Noncurrent Portion of Notes Receivable 
Current Portion 0
Non-current portion 1,932,435

2. Non-interest-bearing Note with Unrealistic Interest Rate (Installment)


On January 1, 2016, Gale Co. sold delivery equipment costing P1,000,000 with accumulated depreciation of P150,000 in excha
Expected Date of Collection Amount of Cash Flow
31-Dec-16 P1,000,000
31-Dec-17 600,000
31-Dec-18 200,000
The prevailing interest rate for this type is 12%. 

Date Annual Collection


1/1/2016
12/31/2016 1,000,000
12/31/2017 600,000
12/31/2018 200,000
Present Value

Net Selling Price 1,513,580


Less:
Cost 1,000,000
Accumulated Depreciation -150,000 850,000
Gain 663,580

Date Annual Collection


1/1/2016
12/31/2016 1,000,000
12/31/2017 600,000
12/31/2018 200,000

a. Gain or Loss in selling the assets


b.Interest Income for December 31, 2016
c. Carrying Amount for December 31, 2016
d. Current and Noncurrent Portion of Notes Receivable 
Current Portion:
Principal Collection, 2017
Less: Unearned Income
Carrying Amount

Non-current Portion:
Principal Collection, 2018
Less: Unearned Income
Carrying Amount

3. Non-interest-bearing Note (Lumpsum)


On January 1, 2016, Shierly Co. sold delivery equipment costing P1,000,000 with accumulated Depreciation of P150,000 in exc

Face amount 1,800,000


multiply 0.7118 1,281,240
Less:
Cost 1,000,000
Accumulated Depreciation -150,000 850,000
Gain 431,240

Date Interest Income


1/1/2016
12/31/2016 153,749
12/31/2017 172,199
12/31/2018 192,813

a. Gain or Loss in selling the assets 431,240


b.Interest Income for December 31, 2016 153,727
c. Carrying Amount for December 31, 2016 1,434,787
d. Current and Noncurrent Portion of Notes Receivable 
Current portion 0
Non-current portion 1,434,989
I affirm that I have not given or received any unauthorized help on this assignment, and that
accumulated depreciation of P150,000 in exchange for 3-year, 10% P2,000,000 note receivable. Principal is due on December 31, 2018 bu
e amortization table)

Interest Income Discount AmortizaPresent Value


1,903,960
228,475 28,475 1,932,435
231,892.22 31,892.22 1,964,327.42
235,672.58 35,672.58 2,000,000

umulated depreciation of P150,000 in exchange for a 3-year, P1,800,000 non-interest bearing note receivable due as follows:
f Cash Flow

PV of 1

0.8929 892,900
0.7972 478,320
0.7118 142,360
1,513,580
Interest Income Amortization Present Value
1,513,580
181,630 818,370 695,210
83,425 516,575 178,635
21,365 178,635 0

663,580
181,630
695,210

600,000
(83,425)
516,575

200,000
-21,265
178,735

ccumulated Depreciation of P150,000 in exchange for a 3-year, P1,800,000 noninterest bearing note receivable on December 31, 2018. Th

Present value
1,281,240
1,434,989
1,607,187
1,800,000
uthorized help on this assignment, and that this work is my own
e on December 31, 2018 but interest is due annually every December 31. The prevailing interest rate for this type of note is 12%.  

due as follows:
e on December 31, 2018. The prevailing interest rate for this type is 12%.  
type of note is 12%.  

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