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What is amount of interest revenue recognized in formatted

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Reference no: EM132628719

On January 1, 2016, Formatted Company sold a tract of land that was acquired several years ago for P2,800,000. Formatted received a three-year, non-interest-bearing note for P6,000,000 in exchange for the land. There is no readily available market value for the land, but for the current market rate of interest for comparable notes is 15%. The note is payable in equal annual installments of P2,000,000 every December 31, starting December 31, 2016. Present value of an annuity of P1 for three periods at 15% is 2.2832.

Required:

Problem 1. What is the amount of interest revenue recognized in Formatted's profit and loss for 2016 and for 2017?

Problem 2. What is the carrying value of the note at December 31, 2016?

Problem 3. What amounts of the note shall be classified as current assets and non-current assets at December 31, 2016?

Reference no: EM132628719

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