What amount of interest income that Patbingsu should record for the year ended December 31, 2019?
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Patbingsu Machineries, dealer of machinery and equipment, leased equipment to Africa Products on July 1, 2019. The lease is appropriately accounted for as a sale by Patbingsu and as a purchase by Africa. The lease is for 10-year period (the useful life of the asset) expiring on July 1, 2029. The first ten equal annual payments of P250,000 was made on July 1, 2019. Patbingsu purchased the equipment for P1,337,500 on January 1, 2019 and established a list selling price of P1,687,500 on the equipment. Assume that the present value at July 1, 2019 of the payments over the lease term discounted at 12% was P1,582,500. What amount of interest income that Patbingsu should record for the year ended December 31, 2019?
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- ABC Machineries, dealer of machinery and equipment, leased equipment to XYZ on July 01, 2021. The lease is appropriately accounted for as a sale by ABC Machineries and a purchase by XYZ. The lease is for a 10-year period (the useful life) of the asset expiring on June 30, 2031. The first of ten equal annual payments of P250,000 was made on July 01, 2021. ABC Machineries purchased the equipment for P1,337,500 on January 01, 2021 and established a list selling price of P1,687,500 on the equipment. Assume that the present value at July 01, 2021 of rent payments over the lease term discounted at 12% was P1,582,500. What is the amount of net investment in the lease and the total income that ABC Machineries should recognize for the year ended December 31, 2021? * 6ABC Machineries, dealer of machinery and equipment, leased equipment to XYZ on July 01, 2021. The lease is appropriately accounted for as a sale by ABC Machineries and a purchase by XYZ. The lease is for a 10-year period (the useful life) of the asset expiring on June 30, 2031. The first of ten equal annual payments of P250,000 was made on July 01, 2021. ABC Machineries purchased the equipment for P1,337,500 on January 01, 2021 and established a list selling price of P1,687,500 on the equipment. Assume that the present value at July 01, 2021 of rent payments over the lease term discounted at 12% was P1,582,500. What is the amount of net investment in the lease and the total income that ABC Machineries should recognize for the year ended December 31, 2021? A. P1,332,500 and P324,950 B. P1,412,450 and P324,950 C. P1,412,450 and P339,950 D. P1,332,500 and P339,950A Corp. leased equipment to a lessee on January 1, 2021. The lease is for an eight-year period expiring on December 31, 2028. The first of eight equal annual payments of P900,000 was made on January 1, 2021 and subsequent payments will be made every January 1 thereafter. A Corp. had purchased the equipment on December 29, 2020 for P4,800,000. A Corp. paid P150,000 in connection with negotiating and arranging the lease. The lease is appropriately accounted for as a dealer’s lease by A Corp.. The present value on January 1, 2021 of all rent payments over the lease term discounted at a 10% interest rate was P5,280,000.How much is the Cost of Sales to be recognized in 2021? How much is the Interest Revenue in 2021? How much is the Net Investment in the Lease at December 31, 2022?
- Torrey Co. manufactures equipment that is sold or leased. On December 31, 2018, Torrey leased equipment to Dalton for a five-year period ending December 31, 2023, at which date ownership of the leased asset will be transferred to Dalton. Equal payments under the lease are P1,100,000 (including P100,000 executorycosts) and are due on December 31 of each year. The first payment was made on December 31, 2018. Collectibility of the remaining lease payments is probable. The lease receivable before the first payment is P3,850,000, and cost is P3,000,000. For the year ended December 31, 2018, what amount of income should Torrey realize from the lease transaction?Sheridan Co. manufactures equipment that is sold or leased. On December 31, 2021, Sheridan leased equipment to Dalton for a 5-year period ending December 31, 2026, at which date ownership of the leased asset will be transferred to Dalton. Equal payments under the lease are $1065000 (including $93000 executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2021. Collectibility of the remaining lease payments is probable. The lease receivable before the first payment is $3500000, and cost is $2650000. For the year ended December 31, 2021, what amount of income should Sheridan realize from the lease transaction? 850000 1065000 1825000 1360000Pharoah Company, a dealer in machinery and equipment, leased equipment to Sands, Inc., on July 1, 2021. The lease is appropriately accounted for as a sales-type lease by Pharoah and as a finance lease by Sands. The lease is for a 10-year period (the useful life of the asset) expiring June 30, 2031. The first of 10 equal annual payments of $748000 was made on July 1, 2021. Pharoah had purchased the equipment for $4850000 on January 1, 2021, and established a list selling price of $6800000 on the equipment. Assume that the present value at July 1, 2021, of the rent payments over the lease term discounted at 8% (the appropriate interest rate) was $5600000.What is the amount of profit on the sale and the amount of interest revenue that Pharoah should record for the year ended December 31, 2021? $750000 and $194080 $1200000 and $448000 $750000 and $224000 $0 and $164080
- Hitech Company, a dealer in machinery and equipment, leased equipment to Quality Company on July 1, 2022. The lease is for a ten-year period equal to the useful life of the asset expiring June 30, 2032. The first of ten equal annual payments of P250,000 was made on July 1, 2022. Hitech had purchased the equipment for P1,480,000 on January 1, 2022 and established a list selling price of P1,685,000. The present value on July 1, 2022 of the rent payments over the lease term discounted at 12% was P1,580,000. What amount should Hitech Company record as gain on sale in 2022? ANSWER: 100,000 PLEASE SHOW SOLUTIONDerozan Corp. manufactured equipment at a cost of $244273 and leased it to B Corp. on January 1, 2019 for an eight-year period expiring December 31, 2026. Eight years is considered a major part of the asset’s economic life. Equal payments under the lease are $62200 and are due on January 1 and July 1 of each year. The first payment was made on January 1, 2019. The implicit rate used by Derozan is 8%. Additional information: Present value of an annuity due of $1 for 8 periods at 8% 6.21 Present value of an annuity due of $1 for 16 periods at 4% 12.12 What amount of selling profit or loss should Derozan report for the year ended December 31, 2019?Happy Corporation leased equipment to Great Company on January 1, 2021. The lease is for an eight-year period expiring on December 31, 2028. The first of eight equal annual payments of P900,000 was made on January 1, 2021, and subsequent payments will be made every January 1 thereafter. Happy Corporation had purchased the equipment on December 29, 2020, for P5,280,000, which is equal to its fair value. Happy paid P150,000 in connection with negotiating and arranging the lease. The lease is appropriately accounted for as a direct finance lease by Happy. What is Happy Corporation’s net investment in the lease on January 1, 2021? A. P4,380,000 B. P5,280,000 C. P5,430,000 D. P4,530,000
- Happy Corporation leased equipment to Great Company on January 1, 2021. The lease is for an eight-year period expiring on December 31, 2028. The first of eight equal annual payments of P900,000 was made on January 1, 2021 and subsequent payments will be made every January 1 thereafter. Happy Corporation had purchased the equipment on December 29, 2020 for P4,800,000. Happy paid P150,000 in connection with negotiating and arranging the lease. The lease is appropriately accounted for as a dealer’s lease by Happy. The present value on January 1, 2021 of all rent payments over the lease term discounted at a 10% interest rate was P5,280,000. What is Happy Corporation’s net investment in the lease on December 31, 2021? A. P4,818,000 B. P4,380,000 C. P4,309,000 D. P3,918,000Fox Company, a dealer in machinery and equipment, leased equipment to Tiger Inc. on July 1, 2019. The lease is appropriately accounted for as a finance lease. The lease is for a 10-year period (the useful life of the asset) expiring June 30, 2029. The first of 10 equal annual payments of $500,000 was made on July 1, 2019. Fox had purchased the equipment for $2,675,000 on January 1, 2019, and established a list selling price of $3,375,000 on the equipment. Assume that the present value at July 1, 2019, of the rent payments over the lease term, discounted at 12% (the appropriate interest rate), was $3,165,000. Assuming that Tiger uses straight-line amortization, what is the amount of amortization and interest expense that Tiger should record for the year ended December 31, 2019?Fox Company, a dealer in machinery and equipment, leased equipment to Tiger Inc. on July 1, 2019. The lease is appropriately accounted for as a finance lease. The lease is for a 10-year period (the useful life of the asset) expiring June 30, 2029. The first of 10 equal annual payments of $500,000 was made on July 1, 2019. Fox had purchased the equipment for $2,675,000 on January 1, 2019, and established a list selling price of $3,375,000 on the equipment. Assume that the present value at July 1, 2019, of the rent payments over the lease term, discounted at 12% (the appropriate interest rate), was $3,165,000. What is the amount of profit on the sale and the amount of interest income that Fox should record for the year ended December 31, 2019?a. $0 and $159,900b. $490,000 and $159,900c. $490,000 and $189,900d. $700,000 and $189,900
