Reference no: EM133135845

Question 1 - On December 31, 2014, ABC Company sold for P3,000,000 an old equipment having an original cost of P5,400,000 and carrying amount of P2,400,000. The terms of the sale were P600,000 down payment and P1,200,000 payable each year on December 31 of the next two years. The sale agreement made no mention of interest. However, 9% would be a fair rate for this type of transaction. The present value of an ordinary annuity of 1 at 9% for two years is 1.76. What is the (1) interest income for 2015 and (2) carrying amount of the note receivable on December 31, 2015?

Question 2 - On August 1, 2014, ABC Company's P5,000,000 one-year, non-interest- bearing note due July 31, 2015 was discounted at XYZ Bank at 10.8%. The entity used the straight line method of amortizing discount. What is the carrying amount of the note payable on December 31,2014?

Question 3 - XYZ Co. owns 55,000 shares out of the 300,000 total outstanding shares of ABC, Inc. The investment in ABC's shares has a carrying value of P1,300,000 on January 1, 2020. XYZ also owns bonds issued by ABC that are convertible into 25,000 ordinary shares. The bonds are convertible anytime, however, XYZ does not intend to convert the,. ABC does not have any other outstanding convertible bonds aside from those held by XYZ. ABC reported profit of P3,300,000 and declared and paid dividends of P180,000 in 2020. How much is the carrying amount of XYZ's investment in ABC shares as of December 31, 2020?