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a. Gross investment in the lease on January 1, 20x1. b. Net investment in the lease on January 1, 20x1. Unearned interest income on January 1, 20xl.

a. Gross investment in the lease on January 1, 20x1. b. Net investment in the lease on January 1, 20x1. Unearned interest income on January 1, 20xl.

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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On January 1, 20x1, NUPTIAL OF MARRIAGE Financing Co. leased equipment to WEDDING, Inc. Information on the lease is shown below. Cost of equipment Useful life of equipment Lease term Annual rental payable at the end of each year P600,000 5 years 4 years 220,000 Additional information: The annual lease payment includes P18,098 pertaining to insurance taken by NUPTIAL on the equipment leased. Direct costs incurred by NUPTIAL in negotiating the lease amounted to P40,000. The implicit rate, after adjustment for the foregoing items, is 10%. Requirements: Compute for the following: a. Gross investment in the lease on January 1, 20x1. b. Net investment in the lease on January 1, 20x1. c. Unearned interest income on January 1, 20x1.
Transcribed Image Text:On January 1, 20x1, NUPTIAL OF MARRIAGE Financing Co. leased equipment to WEDDING, Inc. Information on the lease is shown below. Cost of equipment Useful life of equipment Lease term Annual rental payable at the end of each year P600,000 5 years 4 years 220,000 Additional information: The annual lease payment includes P18,098 pertaining to insurance taken by NUPTIAL on the equipment leased. Direct costs incurred by NUPTIAL in negotiating the lease amounted to P40,000. The implicit rate, after adjustment for the foregoing items, is 10%. Requirements: Compute for the following: a. Gross investment in the lease on January 1, 20x1. b. Net investment in the lease on January 1, 20x1. c. Unearned interest income on January 1, 20x1.
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