PROBLEM 6 On January 1, 2020, MECQ Company leased to Wuhan Company a Lab Equipment in a
Question:
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PROBLEM 6
On January 1, 2020, MECQ Company leased to Wuhan Company a Lab Equipment in a Sales Type Lease with the following details:
Annual Rental payable at the end of each year1,200,000
Lease Term and Useful Life5 years
Cost of Machinery2,500,000
Guaranteed Residual Value250,000
Implicit Interest Rate12%
Payment starts on January 1, 2020
1.How much is the Value of Net Investment (Sales) of the Sales Type Lease?
2.How much is the Gross Profit of the Sales Type Lease?
3.How much is the Carrying Amount of the Lease as of December 31, 2021?
4.How much is the Interest Income for 2020?
PROBLEM 4
On January 1, 2020, May Comprehensive Din Company leased to another entity a Machinery, the Lease is treated as Direct Financing Lease
Cost of the Asset3,787,377.91
Unguaranteed Residual Value400,000
Useful Life and Lease Term4 Years
Implicit Rate10%
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