On January 1, 2021, IMBROGLIO Co. leased equipment to COMPLICATION, Inc. Information on the lease is shown below:

 

Cost of equipment ₱ 1,200,000

Useful life of equipment 5 years

Lease term 4 years

Annual rent payable at the start of each year 400,000

Interest rate implicit in the lease 10%

 

Initial direct costs amounted to ₱80,000. The lease qualifies for sales type lease accounting.

a) How much is the total interest income (finance income) to be recognized by IMBROGLIO over the lease term?

b)  How much is the gross investment in the lease on January 1, 2021?

c) How much is the net investment in the lease on January 1, 2021?

d)How much is the gross profit from the sale?