On January 1, 2021, OH Company

On Januarysold
1, 2021,
goodsOHto HO
Company
company.
soldHo
goods
signed
to HO
a non-interest
company. Ho bearing
signednote
a non-interest
requiring payment
bearing note requiring payment
of P 600,000 annually for seven years to be paid every December 31, 2021.
PV OF AN ORDINARY OF ANNUITY OF 1
The prevailing rate of interest for this type of note at the date of issuance was 10%.

What is the carrying amount on January 1, 2021?

PV Factor 4.8684
600,000

PV - 2,921,040.00- CA

What is the unearned interest income on January 1, 2021?

Formula for Present Value

Formula
of an for
ordinary
Present
of Value
an annuity
of an of
ordinary
1 usingof
a Non-
an annuity
Scientific
of 1Calculator
using a Non- Scientific Calculator
FV - 4,200,000.00-

a. 1.10 divide divide then

a. 1.10
click divide
equal 7divide
timesthen
thenclick
minusequal
1 then
7 times
equalthen
thenminus
divide1 10%
then then
equalequal,
then divide
disregard
10%the
then
negative
equal, sign
disregard
then multiply
the negative
by the
sign
annual
then cash
multiply
flow.by the ann
PV/CA - 2,921,040.00-

UII - 1,278,960.00-
Pabebe Company is a dealerPabebe
in equipment.
Company OnisDecember
a dealer in31,
equipment.
2021, theOn
entity
December
sold an31,
equipment
2021, theinentity
exchange
sold for
an equipment
a non-interest
in exchange
bearing note
for a non-interest bearing note
requiring five annual payments
requiring
of P 500,000.
five annual
Thepayments
first Payment
of P 500,000.
was madeThe
onfirst
January
Payment
1,2022
was made on January 1,2022

PV OF AN ANNUITY DUE OF 1
The market interest rate forThe
similar
market
notes
interest
was 8%rate for similar notes was 8%

1. What is the carrying amount

1. What
of the
is the
Notes
carrying
Receivable
amount
on of
December
the Notes
31,Receivable
2021? on December 31, 2021?

2. What amount of interest2.

income
What amount
should be
ofreported
interest income
for December
should 31,
be reported
2022? for December 31, 2022?

PV FACTOR 4.3121
500,000

PV - 2,156,050.00-CA

X 8%

INTEREST INCOME FOR DECEMBER 31, 2022 - 172,484.00-

Formula for Present Value of an annuity due of 1 using a Non- Scien

a. 1.08 divide divide then click equal 4 times then minus 1 then equ
 On December 31, 2021, FINALE company sold for P 3,000,000 an old equipment having an original cost of P 5,400,000
and carrying amount of P 2,400,000. (COST- AD)

The terms of the sale were P 600,000 down payment and P 1,200,000 payable each year on December 31 for the next tw
The sale agreement made no mention of the interest.

However, 9% would be a a fair rate for this type of transaction.

1. What is the carrying amount on December 31, 2021?

2. What is the Unearned Interest Income on December 31, 2021?

3. What is the interest income on December 31, 2022?

PV FACTOR 1.7591
1,200,000

1.) PV - 2,110,920.00-CA

ty due of 1 using a Non- Scientific Calculator FA 2,400,000

PV 2,110,920

times then minus 1 then equal then divide 8% then equal, disregard the negative sign then increase the value by 1 then multiply by the annual cash flow.
2.) UII 289,080

3.) PV 2,110,920
% RATE 9%

INTEREST INCOME
189,983 UI 189,983
II 189,983
g an original cost of P 5,400,000 On January 1, 2021, VACCINE Company sold machinery and equipment with a historical cost of P 5,000,000
and accumulated depreciation of P 1,000,000 in exchange for a promissory note non- interest bearing note of P 3,500,0
payable for 5 years. The prevailing market rate is P 15%
ar on December 31 for the next two years.
PV OF AN ORDINARY OF ANNUITY OF 1 1 What is the Present Value on January 1, 2021?

2 What is the Unearned Interest Income on January 1, 2021?

Formula for Present Value of 1 using a Scientific Calculator:

1 PV 1,740,119

2 FA 3,500,000
PV 1,740,119

Formula for Present Value of an ordinary of an annuity of 1 using a Non- Scientific Calculator UnearnedII1,759,881
a. 1.09 divide divide then click equal 2 times then minus 1 then equal then divide 9% then equal, disregard the negative sign then multiply by the annual cash flow.
1,740,118 NON- SCIENTIFIC CALCULATOR
Formula for Present Value of 1 us
of P 5,000,000
t bearing note of P 3,500,000

for Present Value of 1 using Non- Scientific Calculator