Vanderbilt Company is a dealer in machinery. On January 1, 2010 machinery was leased to another enterprise with the following provisions: Annual rental payable at the end of each year, 3,000,000 Lease term and useful life of machinery, 5 years Cost of machinery, 8,000,000 Residual value-unguaranteed, 1,000,000 Implicit interest rate, 12% PV of an ordinary annuity of 1 for 5 periods at 12% 3.60 PV of 1 for 5 periods at 12% 0.57 At the end of the lease term on December 31, 2010, the machinery will revert to Vanderbilt. The perpetual inventory system is used. Vanderbilt incurred initial direct cost of P300,000 in finalizing the lease agreement. What is the total financial revenue from the lease? a. 4,630,000 b. 4,200,000 c. 5,200,000 d. 3,630,000
Vanderbilt Company is a dealer in machinery. On January 1, 2010 machinery was leased to another enterprise with the following provisions: Annual rental payable at the end of each year, 3,000,000 Lease term and useful life of machinery, 5 years Cost of machinery, 8,000,000 Residual value-unguaranteed, 1,000,000 Implicit interest rate, 12% PV of an ordinary annuity of 1 for 5 periods at 12% 3.60 PV of 1 for 5 periods at 12% 0.57 At the end of the lease term on December 31, 2010, the machinery will revert to Vanderbilt. The perpetual inventory system is used. Vanderbilt incurred initial direct cost of P300,000 in finalizing the lease agreement. What is the total financial revenue from the lease? a. 4,630,000 b. 4,200,000 c. 5,200,000 d. 3,630,000
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
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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Vanderbilt Company is a dealer in machinery. On January 1, 2010 machinery was leased to another enterprise with the following provisions:
Annual rental payable at the end of each year, 3,000,000
Lease term and useful life of machinery, 5 years
Cost of machinery, 8,000,000
Residual value-unguaranteed, 1,000,000
Implicit interest rate, 12%
PV of an ordinary annuity of 1 for 5 periods at 12% 3.60
PV of 1 for 5 periods at 12% 0.57
At the end of the lease term on December 31, 2010, the machinery will revert to Vanderbilt. The perpetual inventory system is used. Vanderbilt incurred initial direct cost of P300,000 in finalizing the lease agreement.
What is the total financial revenue from the lease?
Annual rental payable at the end of each year, 3,000,000
Lease term and useful life of machinery, 5 years
Cost of machinery, 8,000,000
Residual value-unguaranteed, 1,000,000
Implicit interest rate, 12%
PV of an ordinary annuity of 1 for 5 periods at 12% 3.60
PV of 1 for 5 periods at 12% 0.57
At the end of the lease term on December 31, 2010, the machinery will revert to Vanderbilt. The perpetual inventory system is used. Vanderbilt incurred initial direct cost of P300,000 in finalizing the lease agreement.
What is the total financial revenue from the lease?
a. 4,630,000
b. 4,200,000
c. 5,200,000
d. 3,630,000
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