An entity is a manufacturer of machinery, It useslease agreements to sell its product, On January 1,2019, the entity leased a machine to another entityunder the following terms:The lease term is 5 years.The annual rental is P500,000 payable everyJanuary 1, 2019.The machine has a cost to the entity of P1,600,000.Implicit interest rate in the lease, known to thelessee, is 8%.The machine reverts back to the entity at theend of 5 years with unguaranteed residual valueof P400,000. The present value factors of 1 andannuity due at 8% for 5 periods are 0.68 and 4.21respectively,What amount gross income should be recognized bythe entity for 2019?

Gross income is the income to be earned in total lease period.

An entity is a ma achinery. It us lease agreements to sell its product, On January 2019, the entity leased a machine to another en under the following terms: The lease term is 5 years, The annual rental is P500,000 payable every January 1, 2019. The machine has a cost to the entity of P1,60C Implicit interest rate in the lease, known to th lessee, is 8%. The machine reverts back to the entity at the end of 5 years with unguaranteed residual value of P400,000. The present value factors of 1 and annuity due at 8% for 5 periods are 0.68 and 4.2 respectively. What amount gross income should be recognized the entitu for 2019?

An entity is a ma achinery. It us lease agreements to sell its product, On January 2019, the entity leased a machine to another en under the following terms: The lease term is 5 years, The annual rental is P500,000 payable every January 1, 2019. The machine has a cost to the entity of P1,60C Implicit interest rate in the lease, known to th lessee, is 8%. The machine reverts back to the entity at the end of 5 years with unguaranteed residual value of P400,000. The present value factors of 1 and annuity due at 8% for 5 periods are 0.68 and 4.2 respectively. What amount gross income should be recognized the entitu for 2019?

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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