On December 31, 2020, Shawn Company acquired a piece of equipment from Hailey Company by issuing a P1,200,000 note, payable in full on December 31, 2024. Shawn’s credit rating permits it to borrow funds from its several lines of credit at 10%. The equipment is expected to have a 5-year life and a P150,000 salvage value. The present value of 1 at 10% for 4 periods is 0.68301. 1. What is the equipment’s book value on December 31, 2022? 2. What is the carrying value of the note at December 31, 2022?

On December 31, 2020, Shawn Company acquired a piece of equipment from Hailey Company by issuing a P1,200,000 note, payable in full on December 31, 2024. Shawn’s credit rating permits it to borrow funds from its several lines of credit at 10%. The equipment is expected to have a 5-year life and a P150,000 salvage value. The present value of 1 at 10% for 4 periods is 0.68301. 1. What is the equipment’s book value on December 31, 2022? 2. What is the carrying value of the note at December 31, 2022?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 23E

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