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A mid-rise building with carrying amount of P5,000,000 was sold at its fair value of P6,000,000. The seller-lessee immediately leased back the building from the buyer with annual rental of P500,000 for ten years with lease payment, payable at the end of each of the next ten years. On this date, the market rate of interest is 8%. • PV of an ordinary annuity of 1 at 8% for 10 periods is 6.7101 • PV of an annuity due of 1 at 8% for 10 periods is 7.2469 How much is the gain on the sale-leaseback? (round off your final answer to the nearest peso value) *

A mid-rise building with carrying amount of P5,000,000 was sold at its fair value of P6,000,000. The seller-lessee immediately leased back the building from the buyer with annual rental of P500,000 for ten years with lease payment, payable at the end of each of the next ten years. On this date, the market rate of interest is 8%. • PV of an ordinary annuity of 1 at 8% for 10 periods is 6.7101 • PV of an annuity due of 1 at 8% for 10 periods is 7.2469 How much is the gain on the sale-leaseback? (round off your final answer to the nearest peso value) *

FINANCIAL ACCOUNTING
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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A mid-rise building with carrying amount of P5,000,000 was sold at its fair value of P6,000,000. The seller-lessee immediately leased back the building from the buyer with annual rental of P500,000 for ten years with lease payment, payable at the end of each of the next ten years. On this date, the market rate of interest is 8%. • PV of an ordinary annuity of 1 at 8% for 10 periods is 6.7101 • PV of an annuity due of 1 at 8% for 10 periods is 7.2469 How much is the gain on the sale-leaseback? (round off your final answer to the nearest peso value) *
Transcribed Image Text:A mid-rise building with carrying amount of P5,000,000 was sold at its fair value of P6,000,000. The seller-lessee immediately leased back the building from the buyer with annual rental of P500,000 for ten years with lease payment, payable at the end of each of the next ten years. On this date, the market rate of interest is 8%. • PV of an ordinary annuity of 1 at 8% for 10 periods is 6.7101 • PV of an annuity due of 1 at 8% for 10 periods is 7.2469 How much is the gain on the sale-leaseback? (round off your final answer to the nearest peso value) *
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