On January 1, 2021, Dingding Company sold an equipment to Dongdong Company for P 1,900,000. Because of
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On January 1, 2021, Dingding Company sold an equipment to Dongdong Company for P 1,900,000. Because of the entity's commitments to its customers to provide their needs for the next four years, Dingding Company simultaneously leased back the equipment. The transfer of the asset to the buyer qualifies to be accounted for a sale under IFRS 15. Information relating to this transaction follows:
Fair value of equipment 2,200,000
Carrying amount of equipment 1,700,000
Remaining useful life of machinery 8 years
Lease term 5 years
Annual rent payable at the end of each year 500,000
Market rate of interest 10%
How much is the gain on sale leaseback?
Expert Answer:
ANSWER When an asset is provided by the lessor to the lessee then that arrangement is described ... View the full answer
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