AE 111 Final Summative Assessment 1

AE 111 (Final Part 1)- Summative Assessment
40/50
On January 1 ,2020 ABC Company sold a building and received as consideration
P1,000,000 cash and P4,000,000 noninterest bearing note due on January 1, 2023.
There was no established exchange price for the building and the note had no ready
market. The prevailing rat of interest for a note of this type on January 1, 2020 was
10%. The present value of 1 at 10% for three periods is 0.75 and the present value of
annuity of 1 at 10% for three periods is 2.4869. What amount of interest revenue
should be reported for 2021? *
330000
On January 1, 2020 DEF Company sold machineries with a carrying amount of
P4,800,000 in exchange for a P6,000,000 noninterest-bearing note due January 1,
2023. There was no established exchange price for the machineries. The prevailing
rate of interest for similar note was 10%. The present value of 1 at 10% for three
periods is 0.75 and the present value of annuity of 1 at 10% for three periods is
2.4869. Compute the interest income for 2020. *
450000
On January 1, 2020 DEF Company sold machineries with a carrying amount of
P4,800,000 in exchange for a P6,000,000 noninterest-bearing note due January 1,
2023. There was no established exchange price for the machineries. The prevailing
rate of interest for similar note was 10%. The present value of 1 at 10% for three
periods is 0.75 and the present value of annuity of 1 at 10% for three periods is
2.4869. Compute for the gain or (loss) on sale of machineries for 2020 *
300000
At year-end, GHI Co. received two P1,000,000 notes receivable from customers in
exchange for services rendered. On both notes, interest is calculated on the
outstanding principal balance at the annual rate of 3% and payable at maturity. The
note from XXX Corp., made under customary trade terms, is due in nine months and
the note from UUU Company is due in five years. The market interest rate for
similar notes was 8%. The present value of 1 due in nine months is 0.944 and the
present value of 1 due in five years is 0.68. The present value of annuity of 1 at 8%
for five year is 3.9927. At what amount should the note receivable from XXX Corp.
be reported at year-end? *
1085600
At year-end, GHI Co. received two P1,000,000 notes receivable from customers in
exchange for services rendered. On both notes, interest is calculated on the
outstanding principal balance at the annual rate of 3% and payable at maturity. The
note from XXX Corp., made under customary trade terms, is due in nine months and
the note from UUU Company is due in five years. The market interest rate for
similar notes was 8%. The present value of 1 due in nine months is 0.944 and the
present value of 1 due in five years is 0.68. The present value of annuity of 1 at 8%
for five year is 3.9927. At what amount should be the note receivable from UUU
Company be reported at year-end? *
1840000
On December 31, 2020, JKL Bank granted a P5,000,000 loan to a borrower with
10% stated rate payable annually and maturing in 5 years. The loan was discounted
at the market interest rate of 12%. Unfortunately, the financial condition of the
borrower worsened because of lower revenue. On December 31 ,2022, the bank
determined that the borrower would pay back only P3,000,000 of the principal at
maturity. However, it was considered likely that interest would continue to be paid
on the P5,000,000 loan. The present value of 1 at 12% is 0.57 for five periods and
0.71 for three periods. In addition, the present value of an ordinary annuity of 1 at
12% is 3.60 for five periods and 2.40 for three periods. Compute for the amount of
cash paid to the borrower on December 31, 2020. *
4650000
12% is 3.60 for five periods and 2.40 for three periods. Compute for the carrying
amount of the loan receivable on December 31, 2022. *
4772960

12% is 3.60 for five periods and 2.40 for three periods. Compute for the impairment
loss on loan receivable to be recognized in 2022? *
1442960
MNO Bank granted a loan to a borrower on January 1, 2020. The interest on the
loan is 10% payable annually starting December 31, 2020. The loan matures in three
years on December 31, 2022. Additional information is as follows: Principal amount
of P5,000,000; Direct origination cost incurred for P100,000; Indirect origination
cost incurred for P50,000 and Origination fee received from the borrower was
P340,000. After considering the origination fee received from the borrower and the
direct origination cost incurred, the effective rate on the loan is 12%. Compute for
the interest income for 2020. *
571200
MNO Bank granted a loan to a borrower on January 1, 2020. The interest on the
loan is 10% payable annually starting December 31, 2020. The loan matures in three
years on December 31, 2022. Additional information is as follows: Principal amount
of P5,000,000; Direct origination cost incurred for P100,000; Indirect origination
cost incurred for P50,000 and Origination fee received from the borrower was
P340,000. After considering the origination fee received from the borrower and the
direct origination cost incurred, the effective rate on the loan is 12%. Compute for
the carrying amount of the loan receivable on December 31, 2020. *
4831200

AE 111 Final Summative Assessment 1

Uploaded by

Copyright:

Available Formats

AE 111 Final Summative Assessment 1

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

AE 111 Final Summative Assessment 1

Uploaded by

Copyright:

Available Formats

AE 111 (Final Part 1)- Summative Assessment

You might also like