Quiz 1 On Mid Term Period - Notes Receivable
Quiz 1 On Mid Term Period - Notes Receivable
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ADAPTED: Conrado T. Valix, Jose F. Peralta, & Christian Aris M. Valix, Intermediate Accounting,
Volume 1, 2020 Edition
On December 31, 2020, Precious Company sold an equipment with carrying amount of P2,000,000 and
received a non interest bearing note requiring payment of P500,000 annually for ten years. The first
payment is due December 31, 2021.
The prevailing rate of interest for this type of note at date of issuance is 12%.
1. On December 31, 2020, what is the carrying amount of the note receivable?
a. 5,000,000
b. 2,175,000
c. 1,610,000
d. 2,825,000
a. 3,000,000
b. 2,175,000
c. 825,000
d. 0
a. 600,000
b. 339,000
c. 319,800
d. 300,000
4. What is the carrying amount of the note receivable on December 31, 2021?
a. 2,325,000
b. 4,500,000
c. 2,825,000
d. 2,664,000
On December 31, 2020. Chang Company sold a machine in the ordinary course of business to Door
Company in exchange for a non interest bearing note requiring ten annual payments of P1,000,000.
The entity made the first payment on December 31, 2020. The market interest rate for similar notes at
date of issuance was 8%.
a. 7,250,000
b. 5,000,000
c. 6,250,000
d. 8,000,000
6. On December 31, 2020, what is the carrying amount of the notes receivable?
a. 4,500,000
b. 4,600,000
c. 6,250,000
d. 6,710,000
a. 580,000
b. 720,000
c. 500,000
d. 625,000
8. What is the carrying amount of the notes receivable on December 31, 2021?
a. 8,000,000
b. 6,750,000
c. 5,250,000
d. 5,750,000
On January 1, 2020, Akin Company sold equipment with a carrying amount of P4,800,000 in exchange
for a P6,000,000 non interest bearing note due January 1, 2023. There was no established exchange
price for the equipment.
a. 600,000
b. 500,000
c. 450,000
d. 400,000
10. What amount should be reported as gain or loss on sale of equipment for 2020?
a. 1,200,000 gain
b. 2,700,000 gain
c. 300,000 gain
d. 300,000 loss