INTEREST-BEARING

NOTE RECEIVABLE
ILLUSTRATION 1
1. The gain or loss on sale shall be
On March 1, 2023, M Company a. 750,000 loss c. 250,000 loss
sold its land with carrying b. 750,000 gain d. 250,000 gain
amount of P2,750,000 by 2. Interest income for 2023 shall be
a. 250,000 c. 291,667
receiving P500,000 cash and b. 300,000 d. 350,000
P3,000,000 face amount 3. Accrued interest receivable as of December 31,
promissory note that will 2023 shall be
a. 250,000 c. 291,667
mature on February 28, 2027. b. 300,000 d. 350,000
The note bears annual interest 4. Interest income receivable as of December 31, 2024
of 10% and payable every shall be
a. 250,000 c. 291,667
February 28 of each year, b. 300,000 d. 350,000
starting in 2024.
ILLUSTRATION 1
1. The gain or loss on sale shall be
On March 1, 2023, M Company a. 750,000 loss c. 250,000 loss
sold its land with carrying b. 750,000 gain d. 250,000 gain
amount of P2,750,000 by 2. Interest income for 2023 shall be
a. 250,000 c. 291,667
receiving P500,000 cash and b. 300,000 d. 350,000
P3,000,000 face amount 3. Accrued interest receivable as of December 31,
promissory note that will 2023 shall be
a. 250,000 c. 291,667
mature on February 28, 2027. b. 300,000 d. 350,000
The note bears annual interest 4. Interest income receivable as of December 31, 2024
of 10% and payable every shall be
a. 250,000 c. 291,667
February 28 of each year, b. 300,000 d. 350,000
starting in 2024.
ILLUSTRATION 2 1. Interest income for the year 2024 shall be
a. 312,000 c. 288,000
b. 240,000 d. 336,000
On May 1, 2023, Cold Company 2. Accrued interest receivable as of December 31,
received a notes receivable with 2024 shall be
a. 240,000 c. 192,000
face amount of P6,000,000 from b. 360,000 d. 288,000
selling its land with carrying 3. Interest income for the year 2025 shall be
amount of P6,300,000. The face a. 312,000 c. 240,000
b. 336,000 d. 288,000
amount is payable in five equal
4. Total amounts to be included in the current and
annual installments every April noncurrent assets, respectively, as of December 31,
30 of each year, starting 2024. 2023 with the respect to the note receivable shall be
a. 1,200,000 & 4,800,000 c. 1,200,000 & 3,600,000
The notes bears 6% annual b. 1,440,000 & 4,800,000 d. 1,440,000 & 3,600,000

interest and payable on the 5. Total amounts to be included in the current and
noncurrent assets, respectively, as of December 31,
same dates as the installment 2024 with the respect to the note receivable shall be
payments of the face amount. a. 1,392,000 & 3,600,000
b. 1,440,000 & 3,600,000
c. 1,392,000 & 2,400,000
d. 1,440,000 & 2,400,000
ILLUSTRATION 2 1. Interest income for the year 2024 shall be
a. 312,000 c. 288,000
b. 240,000 d. 336,000
On May 1, 2023, Cold Company 2. Accrued interest receivable as of December 31,
received a notes receivable with 2024 shall be
a. 240,000 c. 192,000
face amount of P6,000,000 from b. 360,000 d. 288,000
selling its land with carrying 3. Interest income for the year 2025 shall be
amount of P6,300,000. The face a. 312,000 c. 240,000
b. 336,000 d. 288,000
amount is payable in five equal
4. Total amounts to be included in the current and
annual installments every April noncurrent assets, respectively, as of December 31,
30 of each year, starting 2024. 2023 with the respect to the note receivable shall be
a. 1,200,000 & 4,800,000 c. 1,200,000 & 3,600,000
The notes bears 6% annual b. 1,440,000 & 4,800,000 d. 1,440,000 & 3,600,000

interest and payable on the 5. Total amounts to be included in the current and
noncurrent assets, respectively, as of December 31,
same dates as the installment 2024 with the respect to the note receivable shall be
payments of the face amount. a. 1,392,000 & 3,600,000
b. 1,440,000 & 3,600,000
c. 1,392,000 & 2,400,000
d. 1,440,000 & 2,400,000
NONINTEREST-BEARING
NOTE RECEIVABLE
ILLUSTRATION 1
On January 1, 2024, Margaret Company sold its land for
a total price of P7,000,000. Related carrying amount of
the land is P6,000,000. The buyer paid P1,500,000 down
payment and for the balance, signed a noninterest-
bearing promissory note that will mature on December
31, 2026. Relevant market rate is 9%.
ILLUSTRATION 2
At the beginning of the 2024, Folk Company sold goods
costing P1,000,000 to a buyer who signed a noninterest-
bearing promissory note with a face amount of
P2,500,000. The note will mature on December 31, 2027.
Relevant market rate on the date of issuance is 6%.
ILLUSTRATION 3
Sleigh Company lent P3,500,000 to one of its customers
on January 1, 2024. The customer signed a noninterest-
bearing promissory note for the same amount that will
mature on December 31, 2027. The face amount is
payable in four equal annual installments at the end of
each year, starting on December 31, 2024. Relevant
market rate is 8%.
ILLUSTRATION 4
On January 1, 2024, Nativity Company sold its building
with original cost of P8,000,000 and carrying amount of
P4,200,000 by receiving a P4,800,000 noninterest-
bearing promissory note that will mature on December
31, 2029. The face amount is payable in P800,000
annual installments to be made of each year starting
January 1, 2024. Market rates averaged at 7%.