1. On August 1, 2021, DASHER Company leased a machine to SANTA Company for a 6-year period requiring payments of P100,000 at the end of each year. The machine cost P480,000, with an economic life of eight years and no residual value. DASHER's implicit interest rate is 10% and present value factors are as follows: Present value of annuity due of P1 at 10% for 6 periods – 4.791; Present value of an annuity of P1 at 10% for 8 periods – 5.868. DASHER recorded the lease as a direct financing lease. At the inception of the lease, how much should the gross lease receivable account balance be? *

1. On August 1, 2021, DASHER Company leased a machine to SANTA Company for a 6-year period requiring payments of P100,000 at the end of each year. The machine cost P480,000, with an economic life of eight years and no residual value. DASHER's implicit interest rate is 10% and present value factors are as follows: Present value of annuity due of P1 at 10% for 6 periods – 4.791; Present value of an annuity of P1 at 10% for 8 periods – 5.868. DASHER recorded the lease as a direct financing lease. At the inception of the lease, how much should the gross lease receivable account balance be? *

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.

Question

1. On August 1, 2021, DASHER Company leased a machine to SANTA
Company for a 6-year period requiring payments of P100,000 at the end
of each year. The machine cost P480,000, with an economic life of eight
years and no residual value. DASHER's implicit interest rate is 10% and
present value factors are as follows: Present value of annuity due of P1 at
10% for 6 periods – 4.791; Present value of an annuity of P1 at 10% for 8
periods – 5.868. DASHER recorded the lease as a direct financing lease. At
the inception of the lease, how much should the gross lease receivable
account balance be? *

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