15. Legato Co. leased out to Staccato, Inc. a machine with a carrying amount of P593,685 and a remaining useful life of 5 years. Legato Co. incurred nitial direct costs of P25,000 in negotiating the lease. The machine reverts back to Legato Co. at the end of the lease, at which time the residual value of the machine is expected to be P10,000. The lease term is 4 years and annual rentals are due at the beginning of each year. If Legato Co. wants to eam a fair return on its net investment based on the current market rate of 12%, what amount of annual rental should Legato Co. charge Staccato Inc? O a. 180,000 O b. 170,000 O . 120,000 O d. 100,000
15. Legato Co. leased out to Staccato, Inc. a machine with a carrying amount of P593,685 and a remaining useful life of 5 years. Legato Co. incurred nitial direct costs of P25,000 in negotiating the lease. The machine reverts back to Legato Co. at the end of the lease, at which time the residual value of the machine is expected to be P10,000. The lease term is 4 years and annual rentals are due at the beginning of each year. If Legato Co. wants to eam a fair return on its net investment based on the current market rate of 12%, what amount of annual rental should Legato Co. charge Staccato Inc? O a. 180,000 O b. 170,000 O . 120,000 O d. 100,000
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:15. Legato Co. leased out to Staccato, Inc. a machine with a carrying amount of P593,685 and a remaining useful life of 5 years. Legato Co. incurred
initial direct costs of P25,000 in negotiating the lease. The machine reverts back to Legato Co. at the end of the lease, at which time the residual value
of the machine is expected to be P10,000. The lease term is 4 years and annual rentals are due at the beginning of each year. If Legato Co. wants to
earn a fair return on its net investment based on the current market rate of 12%, what amount of annual rental should Legato Co. charge Staccato Inc?
O a. 180,000
b. 170,000
c. 120,000
d. 100,000
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