On January 1, 2018, Solid Co. sold an equipment to Liquid Co. Liquid Co.

issued a 4-year, P100,000, 10%

note to Solid
Co. The note requires interest to be paid annually every December 31 starting December 31, 2018. The
equipment has a
cost of P500,000 and accumulated depreciation as of January 1, 2018 of P350,000. The prevailing
interest rate for a note
of this type is 16%. (Round off PV factors to four decimal places)