Question
On January 1, 2020, Kaso May Retention Company leased an Asset to another entity with the following details, the Lease is treated as Direct Financing
On January 1, 2020, Kaso May Retention Company leased an Asset to another entity with the following details, the Lease is treated as Direct Financing Lease:
Cost of the AssetP8,722,484.87
Guaranteed Residual ValueP400,000
Useful Life and Lease Term8 years
Implicit Rate10%
PV of Ordinary Annuity of 10% for 8 periods
5.3349
PV of Annuity Due of 10% for 8 periods
5.8684
PV of 1 of 10% for 8 periods
0.4665
Payments starts on December 31, 2020
1.What is the Annual Rental of the Finance Lease?
2.What is the Present Value of Rental Payments?
3.What is the Interest Income for 2020?
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Introduction To Accounting An Integrated Approach
Authors: Penne Ainsworth, Dan Deines
5th Edition
0073527009, 9780073527000
