Question
On January 1, 2020, AB Company leased equipment to another entity. The lease is for an eight-year period expiring December 31, 2027. The first of
On January 1, 2020, AB Company leased equipment to another entity. The lease is for an eight-year period expiring December 31, 2027. The first of eight equal annual payments of P900,000 was made on January 1, 2020.
AB Company had previously purchased the equipment for P4,800,000. AB Company approximately accounts for the lease as a sales type lease.
The present value on January 1, 2020 of all rent payments over the lease term discounted at a 10% interest rate was P5,280,000. What amount of interest revenue should be recorded in 2020?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Information For Decision Making Readings In Cost And Managerial Accounting
Authors: Alfred Rappaport
2nd Edition
0134643887, 978-0134643885
