PROBLEM 7

On January 1, 2020, GCQ Company leased to XJPing Company an Equipment in a Sales Type Lease with the following details:

Annual Rental payable at the end of each year600,000

Lease Term and Useful Life5 years

Cost of Machinery1,500,000

Unguaranteed Residual Value 150,000

Implicit Interest Rate 10%

Payment starts on December 31, 2020

1.How much is the Value of Net Investment (Sales) of the Sales Type Lease?

2.How much is the Cost of Goods Sold of the Sales Type Lease?

3.How much is Financial Revenue as of December 31, 2021?

4.How much is the Interest Income for 2021?

PROBLEM 3

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 Value P400,000

Useful Life and Lease Term8 years

Implicit Rate 10%

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