16. Peg Co. leased equipment from Howe Corp. on July 1, 20x5, for an eight-year period expiring June 30, 20x3. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 20x5. The rate of interest contemplated by Peg and Howe is 10%. The cash selling price of the equipment is P3,520,000, and the cost of the equipment on Howe's accounting records is P2,800,000. The lease is appropriately recorded as a sales-type lease. What are the amounts of profit on the sale and interest revenue that Howe should record for the year ended Dec 31, 20x5? O Profit on sale Interest revenue 720,000.00 176,000.00 b. O Profit on sale Interest revenue 720,000.00 146,000.00 C. O Profit on sale Interest revenue 45,000.00 176,000.00 d. O Profit on sale Interest revenue 45,000.00 146,000.00

16. Peg Co. leased equipment from Howe Corp. on July 1, 20x5, for an eight-year period expiring June 30, 20x3. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 20x5. The rate of interest contemplated by Peg and Howe is 10%. The cash selling price of the equipment is P3,520,000, and the cost of the equipment on Howe's accounting records is P2,800,000. The lease is appropriately recorded as a sales-type lease. What are the amounts of profit on the sale and interest revenue that Howe should record for the year ended Dec 31, 20x5? O Profit on sale Interest revenue 720,000.00 176,000.00 b. O Profit on sale Interest revenue 720,000.00 146,000.00 C. O Profit on sale Interest revenue 45,000.00 176,000.00 d. O Profit on sale Interest revenue 45,000.00 146,000.00

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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