On January 1, 20x1, ABC Financing Co. leased equipment to XYZ Inc. Information on the lease...
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On January 1, 20x1, ABC Financing Co. leased equipment to XYZ Inc. Information on the lease is shown below.. Cost of Equipment Useful Life of Equipment Lease Term Annual rent payable at the end of each year. Market rate of interest Residual Value P300,000 5 years 4 years 100,000 10% 20,000 The equipment will revert back to ABC at the end of the lease term. The lease is classified as sales type lease. Requirements: Compute for the following assuming the residual value 1s (1) guaranteed and (2) unguaranteed a. Gross investment in the lease on January 1, 20x1 b. Net-investment in the lease on January 1, 20x1 c. Total interest income to be recognized over the lease term d. Sales, cost of sales and gross profit recognized on the lease. e. Journal entry on January 1, 20x1. On January 1, 20x1, ABC Financing Co. leased equipment to XYZ Inc. Information on the lease is shown below.. Cost of Equipment Useful Life of Equipment Lease Term Annual rent payable at the end of each year. Market rate of interest Residual Value P300,000 5 years 4 years 100,000 10% 20,000 The equipment will revert back to ABC at the end of the lease term. The lease is classified as sales type lease. Requirements: Compute for the following assuming the residual value 1s (1) guaranteed and (2) unguaranteed a. Gross investment in the lease on January 1, 20x1 b. Net-investment in the lease on January 1, 20x1 c. Total interest income to be recognized over the lease term d. Sales, cost of sales and gross profit recognized on the lease. e. Journal entry on January 1, 20x1.
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a Gross investment in the lease on January 1 20x1 Gross Investment Cost of Equipment Initial Direct ... View the full answer
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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