17. Howe Co. leased equipment to Kew Corp. on Jan 2, 20x9, for and eight-year period expiring Dec 31, 2x16. Equal payments under the lease are 600,000 and are due on Jan 2 of each year. The first payment was made on Jan 2, 20x9. The list selling price of the equipment is P3,520,000 and its carrying cost on Howe's books is P2,800,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments at an imputed interest rate of 12% (market rate) is P3,300,000. What amount of profit on the sale should Howe report for the year ended Dec 31, 20x9? O a. 720,000 O b. 500,000 O . 90,000 d.0

17. Howe Co. leased equipment to Kew Corp. on Jan 2, 20x9, for and eight-year period expiring Dec 31, 2x16. Equal payments under the lease are 600,000 and are due on Jan 2 of each year. The first payment was made on Jan 2, 20x9. The list selling price of the equipment is P3,520,000 and its carrying cost on Howe's books is P2,800,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments at an imputed interest rate of 12% (market rate) is P3,300,000. What amount of profit on the sale should Howe report for the year ended Dec 31, 20x9? O a. 720,000 O b. 500,000 O . 90,000 d.0

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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