Proble Reagan Comp In 2020, Rea passenger te Problem 14-13 (AICPA Adapted) lease On January 1, 2020, Gallant Company entered into a agreement with Blacksheep Company for a machine which was carried on the accounting records of Gallant Company at P2,000,000 On January Line on a co transfer to Total payments under the lease which expires on December cost of the machine to Blacksheep Company. Payments of 31, 2029 aggregate P3,550,800 of which P2,400,000 represents Original cos Fair value a P355,080 are due each January 1 of each year. The interest rate of 10% which was stipulated in the lease is considered fair and adequate compensation to Gallant Lease pays Residual va Implicit in Date of fir Lease terr Present v Present 1. Wh Company. Blacksheep Company expects the machine to have a 10-year life, no residual value and be depreciated on a straight line basis. The lease qualifies as a sales type lease. 1. What amount should be recognized by Gallant as profit from sale for the year ended December 31, 2020? a. 1,150,800 b. 1,550,800 400,000 d. 355,080 a. b. C. d. 2. C. 2. What amount of interest income should be recognized by Gallant for the year ended December 31, 2020? 3. a. 244,080 b. 200,000 c. 204,492 d. 240,000 3. What total income before tax should be recognized by Gallant from the lease for the year ended December 31, 2020? a. 204,492 b. 604,492 c. 355,080 d. 755,080 484