Question: Include the Complete Solution. On January 1, 2020, Bulbasaur Company sold a piece of equipment costing P1.100,000 with accumulated depreciation of P200. 000 to Pikachu

Include the Complete Solution.

On January 1, 2020, Bulbasaur Company sold a piece of equipment costing P1.100,000 with accumulated depreciation of P200. 000 to Pikachu Company. Bulbasaur received a down payment of P300,000 and a 10% non-interest-bearing note, P1,800,000 due on December 31, 2025. (Do not round off present value factors. only round off up to two decimals at the final value).

Questions:

1. How much is the gain on the sale of equipment?

2. How much is the carrying amount of the notes receivable as of December 31, 2022?

3. How much is the balance of the discount on notes receivable as of December 31, 2023?

4. Assuming that all data are the same except that the transaction happened on November 1, 2020, but the number of years to maturity is still the same, how much is the carrying amount of the notes receivable as of December 31, 2022?

5. Related to no. 4, how much is the balance of the discount of the notes receivable as of December 31, 2023?

6. Related to no.4. how much is the interest income for the year 2025?

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