Alicia Inc. leased a machinery to Hannah & Co. on January 1, 2020. Lease term is 8 years. Annual rental is P800,000 payable at the beginning of each year starting January 1, 2020. Carrying value of the underlying asset on Alicia’s books is 3,200,000. The lease contract is recorded appropriately as a sales-type lease and has an implicit interest rate of 12%. Alicia normally sells these machineries to customers at a selling price of 4,200,000. How much is Alicia’s gross profit on January 1, 2020? a. None b. 1,000,000 c. 1,251,005 d. 1,400,000
Alicia Inc. leased a machinery to Hannah & Co. on January 1, 2020. Lease term is 8 years. Annual rental is P800,000 payable at the beginning of each year starting January 1, 2020. Carrying value of the underlying asset on Alicia’s books is 3,200,000. The lease contract is recorded appropriately as a sales-type lease and has an implicit interest rate of 12%. Alicia normally sells these machineries to customers at a selling price of 4,200,000. How much is Alicia’s gross profit on January 1, 2020? a. None b. 1,000,000 c. 1,251,005 d. 1,400,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 9RE: Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would...
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Alicia Inc. leased a machinery to Hannah & Co. on January 1, 2020. Lease term is 8 years. Annual rental is P800,000 payable at the beginning of each year starting January 1, 2020. Carrying value of the underlying asset on Alicia’s books is 3,200,000. The lease contract is recorded appropriately as a sales-type lease and has an implicit interest rate of 12%. Alicia normally sells these machineries to customers at a selling price of 4,200,000. How much is Alicia’s gross profit on January 1, 2020?
a. None
b. 1,000,000
c. 1,251,005
d. 1,400,000
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