At the beginning of current year. Howe Company leased equipment to Kew Company for an eight-year...
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At the beginning of current year. Howe Company leased equipment to Kew Company for an eight-year period. Equal payments under the lease are P500,000 and are due at the beginning of each year. carrying amount is P2,000,000. The lease is appropriately and the accounted for as a sales type lease. The present value of the lease payments at an implicit interest rate of 12% is P2,780,000. What amount of profit on the sale should be reported for the current year? Problem 14-11 (IFRS) Gold Company leased equipment to Fair Company and properly recorded the sales type lease. The eight annual payments of P300,000 are due at the beginning of each year. The lessor had purchased the equipment for P1,100,000 and had a list price of P1,800,000. The present value of the lease payments is P1,700,000. The imputed interest rate on the lease was 11% and the lessee had an incremental borrowing rate of 10%. 1. What profit on sale should be reported in the current year? 2. What amount of interest income should be reported in the current year? Company for an 8-year period. On July 1, 2020, Meg Company leased equipment to Wee Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1,2020. The interest rate contemplated by Meg Company and Wee Company is 10%. The cash selling price of the equipment is P3,520,000 and the cost of the equipment on Meg Company's accounting records is P2,800,000. The lease is appropriately recorded as a sales type lease. 1. What amount of profit on sale should be recognized for the year ended December 31, 2020? 2. What amount of interest revenue should be recorded for the year ended December 31, 2020? On January 1, 2020, Gallant Company entered into a lease carried on the accounting records of Gallant Company at agreement with Blacksheep Company for a machine which was P2,000,000. Total payments under the lease which expires on December 31, 2029 aggregate P3,550,800 of which P2,400,000 representa cost of the machine to Blacksheep Company. Payments of P355,080 are due each January 1 of each year. The interest rate of 10% which was stipulated in the lease is considered fair and adequate compensation to Gallant Company. Blacksheep Company expects the machine to have a 10-year life, no residual value and be depreciated on a straight line basis. The lease qualifies as a sales type lease. 1. What amount should be recognized by Gallant as profit from sale for the year ended December 31, 2020? 2. What amount of interest income should be recognized by Gallant for the year ended December 31, 2020? 3. What total income before tax should be recognized by Gallant from the lease for the year ended December 31, 2020? At the beginning of current year. Howe Company leased equipment to Kew Company for an eight-year period. Equal payments under the lease are P500,000 and are due at the beginning of each year. carrying amount is P2,000,000. The lease is appropriately and the accounted for as a sales type lease. The present value of the lease payments at an implicit interest rate of 12% is P2,780,000. What amount of profit on the sale should be reported for the current year? Problem 14-11 (IFRS) Gold Company leased equipment to Fair Company and properly recorded the sales type lease. The eight annual payments of P300,000 are due at the beginning of each year. The lessor had purchased the equipment for P1,100,000 and had a list price of P1,800,000. The present value of the lease payments is P1,700,000. The imputed interest rate on the lease was 11% and the lessee had an incremental borrowing rate of 10%. 1. What profit on sale should be reported in the current year? 2. What amount of interest income should be reported in the current year? Company for an 8-year period. On July 1, 2020, Meg Company leased equipment to Wee Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1,2020. The interest rate contemplated by Meg Company and Wee Company is 10%. The cash selling price of the equipment is P3,520,000 and the cost of the equipment on Meg Company's accounting records is P2,800,000. The lease is appropriately recorded as a sales type lease. 1. What amount of profit on sale should be recognized for the year ended December 31, 2020? 2. What amount of interest revenue should be recorded for the year ended December 31, 2020? On January 1, 2020, Gallant Company entered into a lease carried on the accounting records of Gallant Company at agreement with Blacksheep Company for a machine which was P2,000,000. Total payments under the lease which expires on December 31, 2029 aggregate P3,550,800 of which P2,400,000 representa cost of the machine to Blacksheep Company. Payments of P355,080 are due each January 1 of each year. The interest rate of 10% which was stipulated in the lease is considered fair and adequate compensation to Gallant Company. Blacksheep Company expects the machine to have a 10-year life, no residual value and be depreciated on a straight line basis. The lease qualifies as a sales type lease. 1. What amount should be recognized by Gallant as profit from sale for the year ended December 31, 2020? 2. What amount of interest income should be recognized by Gallant for the year ended December 31, 2020? 3. What total income before tax should be recognized by Gallant from the lease for the year ended December 31, 2020?
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Answer rating: 100% (QA)
For the first scenario involving Howe Company and Kew Company To determine the profit on the sale for the current year we need to calculate the difference between the selling price of the equipment an... View the full answer
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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