Receivables (Part 2)
Initial measurement
2. An entity sells goods for ₱150,000 to a customer who was granted a special credit
period of 1 year. The entity normally sells the goods for ₱120,000 with a credit period
of one month or with a ₱10,000 discount for outright payment in cash. How much is the
initial measurement of the receivable?
a. 150,000 b. 120,000 c. 130,000 d. 110,000
Initial measurement
3. ABC Co. received the following note receivables on January 1, 20x1:
9-month, 10% note from Alpha Company. 15,000
6-month, noninterest bearing note from Beta, Inc. (the
effect of discounting is deemed immaterial) 20,000
14%, 3-year note from Charlie Corp. 30,000
Market rate of interest on January 1, 20x1 10%
Simple interest
4. On August 1, 20x1, ABC Co. received a ₱1,200,000, 10%, 3-year note receivable in
exchange for a vacant lot carried in the books at ₱850,000. Principal, in three equal
installments, plus interest are due annually starting August 1, 20x2. Current market
rates as of April 1, 20x1, December 31, 20x1, and December 31, 20x2 are 10%, 12% and
13%, respectively. How much interest receivable is recognized on December 31, 20x2?
a. 33,333 b. 40,000 c. 50,000 d. 60,000
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Compounded interest
5. On January 1, 20x1, ABC Co. extended a ₱1,200,000 loan to one of its officers as part of
ABC Co.’s car and housing assistance program. The note received is due on January 1,
20x4 and bears 10% interest compounded annually. How much interest receivable is
recognized on December 31, 20x2 statement of financial position?
a. 132,000 b. 120,000 c. 168,000 d. 252,000
7. How much is the carrying amount of the receivable on December 31, 20x2?
a. 800,000 b. 569,424 c. 637,755 d. 714,286
9. How much is the current portion of the receivable on December 31, 20x1?
a. 1,271,036 b. 1,423,560 c. 3,380,102 d. 1,594,388
10. How much is the carrying amount of the receivable on December 31, 20x2?
a. 4,803,663 b. 3,380,102 c. 6,074,699 d. 6,000,000
12. How much is the carrying amount of the receivable on December 31, 20x1?
a. 1,690,510 b. 892,857 c. 2,690,051 d. 1,594,388
13. How much is the carrying amount of the receivable on January 1, 20x3?
a. 892,857 b. 3,380,102 c. 6,074,699 d. 6,000,000
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Noninterest-bearing note – semiannual cash flows
Use the following information for the next two questions:
On January 1, 20x1, ABC Co. sold machinery with historical cost of ₱3,000,000 and
accumulated depreciation of ₱900,000 in exchange for a 3-year, ₱2,100,000 noninterest-
bearing note receivable due in equal semi-annual payments every July 1 and December 31
starting on July 1, 20x1. The prevailing rate of interest for this type of note is 10%.
15. How much is the carrying amount of the receivable on December 31, 20x1?
a. 1,241,083 b. 982,378 c. 1,690,051 d. 1,594,388
The prevailing rate of interest for this type of note is 10%. How much is the carrying
amount of the receivable on December 31, 20x1?
a. 467,354 b. 438,016 c. 376,345 d. 428,346
18. How much is the carrying amount of the receivable on December 31, 20x1?
a. 2,125,390 b. 2,135,341 c. 2,098,343 d. 2,000,000
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Note with below market interest (simple interest) - Principal and interests
collectible in installments
21. On January 1, 20x1, ABC Co. sold machinery costing ₱2,000,000 with accumulated
depreciation of ₱950,000 in exchange for a 3-year, 3%, ₱900,000 note receivable.
Principal is due in three equal annual installments. Interests on the outstanding
principal balance are also due annually and are to be collected together with the
periodic collections on the principal. The prevailing interest rate for this type of note is
12%. How much is the carrying amount of the receivable on December 31, 20x1?
a. 530,261 b. 1,000,562 c. 673,531 d. 789,361
Note with below market interest (compound interest) - Principal and interests due at
maturity
22. On January 1, 20x1, ABC Co. sold machinery costing ₱2,000,000 with accumulated
depreciation of ₱950,000 in exchange for a 3-year, ₱1,200,000 note receivable.
Principal and interest at 3% are due on January 1, 20x4. The prevailing interest rate for
this type of note is 12%. How much is the carrying amount of the receivable on initial
recognition date?
a. 1,311,272 b. 2,000,000 c. 933,337 d. 854,136
The current market rate of interest on January 1, 20x1 is 12%. How much is the carrying
amount of the receivable on initial recognition date?
a. 1,980,685 b. 2,728,860 c. 2,944,264 d. 2,818,706
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