Solution for QID #104838: A)Credulous Company purchased equipment on January 1, 2012 u | StudyHelpMe

A) Credulous Company purchased equipment on January 1, 2012 under the following terms:  a. P200, 000 downpayment  b. Five annual payments of P100, 000, the first installment note to be paid on December 31, 2012. The same equipment was available at a cash price of P580, 000.    Required: How much is the cost of equipment____________________   B) On January 1, 2012, Enrich Company purchased a machine under the following terms:  a. 100,000 downpayment  b. four annual payments of P200, 000, the first installment to be paid on December 31, 2012.   The fair value of the machine is not clearly determinable on the date of acquisition.  The prevailing rate of interest for this type of obligation is 10%. The present value factors at 10% for four periods are:  Present value of 1 .683  Present value of ordinary annuity of 1 3.170    Required: How much is the cost of the machine_________________