1. On January 1, 2018, Lee Company leased a building to Brilliant Company under an operating lease for ten years at P500,000 per year, payable at the first day of each lease year. Lee paid P150,000 to a real estate broker as a finder fee. The building is depreciated P120,000 per year. Lee incurred insurance and property tax expense totaling P90,000 for the year. What is the net rental income for 2018? A. 275,000 B. 290,000 C. 350,000 D. 365,000

2. Thunder Company purchased a tractor on January 1, 2018 at a cost of P1,600,000 for the purpose of leasing it. The tractor is estimated to have a useful life of 5 years with residual value of P100,000. Depreciation is on a straight line basis. On April 1, 2018, Thunder entered into a lease contract for the lease of the tractor for a term of two years up to March 31, 2020. The lessee paid P600,000, the lease fee for one year. Thunder paid P120,000 commission associated with negotiating the lease, P15,000 minor repairs and P10,000 transportation of the tractor to the lessee during the year. What amount of net rent revenue should be reported for the current year? A. 80,000 B. 85,000 C. 160,000 D. 235,000

3. As an incentive to enter a non-cancelable operating lease for office premises for 10 years, Lomi Company as lessor has offered the lessee a rent-free period of two years. Annual rental payment under the lease commencing in the third year is P500,000. What amount of lease income should be recognized by Lomi in the first year? A. 0 B. 400,000 C. 450,000 D. 500,000

4. Ralph Company leased office premises to Wreck Company for a five year term beginning January 1, 2018. Under the terms of the operating lease, rent for the first year is P800,000 and rent for years 2 through 5 is P1,250,000 per annum. However, as an inducement to enter the lease, Ralph granted Wreck the first six months of the lease rent-free. What amount should Ralph report as rental income for 2018? A. 800,000 B. 1,080,000 C. 1,160,000 D. 1,200,000

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