Sato Company entered into a finance lease on January 1, 2018. A third party guaranteed the residual value of the asset under the lease estimated to be P1,200,000 on January 1, 2023, the end of the lease term. Annual lease payments are P1,000,000 due each December 31 beginning December 31, 2018. The last payment is due December 31, 2022. The remaining useful life of the asset was six years at the commencement of the lease. Both the lessor and lessee used 10% as the interest rate. The PV of 1 at 10% for 5 periods is 0.62, and the PV of an ordinary annuity of 1 at 10% for 5 periods is 3.79. What amount should be included in non-current assets in relation to the lease on December 31, 2019?

Answer rating: 100% (QA)

Future Value FV 1200 000 Interest Rate 10 Time 5yra Annual Payments ... View the full answer