A Corp. leased a piece of equipment to a lessee on April 1, 2021. The lease is appropriately recorded as a sale. The lease is for an 8-year period ending March 31, 2029. The first of 8 equal annual payments of P175,000 (excluding executory costs) was made on April 1, 2021. The cost of the equipment to A Corp. is P940,000. The equipment has an estimated useful life of 10 years with a guaranteed residual value of P100,000. At the end of the lease term, the leased equipment reverts to A Corp. The interest rate implicit in the lease is 10%. How much is the Sales to be recognized in 2021? How much is the Interest Revenue in 2021? How much is the Gross Investment in the Lease at April 1, 2021?

A Corp. leased a piece of equipment to a lessee on April 1, 2021. The lease is appropriately recorded as a sale. The lease is for an 8-year period ending March 31, 2029. The first of 8 equal annual payments of P175,000 (excluding executory costs) was made on April 1, 2021. The cost of the equipment to A Corp. is P940,000. The equipment has an estimated useful life of 10 years with a guaranteed residual value of P100,000. At the end of the lease term, the leased equipment reverts to A Corp. The interest rate implicit in the lease is 10%. How much is the Sales to be recognized in 2021? How much is the Interest Revenue in 2021? How much is the Gross Investment in the Lease at April 1, 2021?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 11P

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