Angola Company used a leases as the primary method of selling products. The entity's main product is a small aircraft that is very popular among government officials and corporate executives. Angola Company constructed such aircraft for a President of a big corporation at cost of P 8,000,000. The terms of the lease provided for annual rnetal of P3,328,710 to be paid over 5 years every December 31 of each year with the ownership of the aircraft transferring to the lessee at the end of the lease term. It is estimated that the aircraft will have a residual value of P500,000 after 5 years. Angola Company incurred initial directs costs of P200,000 in finalizing the lease with the lessee. Financing the constrcution was at a 12% rate. The present value of an ordinary annuity of 1 for 5 periods at 12% is 3.605. Required: Compute the total unearned financial revenue Compute the manufacturer profit to be recognized immediately . Compute the interest income for the first year.
Angola Company used a leases as the primary method of selling products. The entity's main product is a small aircraft that is very popular among government officials and corporate executives. Angola Company constructed such aircraft for a President of a big corporation at cost of P 8,000,000. The terms of the lease provided for annual rnetal of P3,328,710 to be paid over 5 years every December 31 of each year with the ownership of the aircraft transferring to the lessee at the end of the lease term. It is estimated that the aircraft will have a residual value of P500,000 after 5 years. Angola Company incurred initial directs costs of P200,000 in finalizing the lease with the lessee. Financing the constrcution was at a 12% rate. The present value of an ordinary annuity of 1 for 5 periods at 12% is 3.605. Required: Compute the total unearned financial revenue Compute the manufacturer profit to be recognized immediately . Compute the interest income for the first year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Angola Company used a leases as the primary method of selling products. The entity's main product is a small aircraft that is very popular among government officials and corporate executives.
Angola Company constructed such aircraft for a President of a big corporation at cost of P 8,000,000.
The terms of the lease provided for annual rnetal of P3,328,710 to be paid over 5 years every December 31 of each year with the ownership of the aircraft transferring to the lessee at the end of the lease term.
It is estimated that the aircraft will have a residual value of P500,000 after 5 years.
Angola Company incurred initial directs costs of P200,000 in finalizing the lease with the lessee.
Financing the constrcution was at a 12% rate. The present value of an ordinary annuity of 1 for 5 periods at 12% is 3.605.
Required:
- Compute the total unearned financial revenue
- Compute the manufacturer profit to be recognized immediately .
- Compute the interest income for the first year.
- Prepare
journal entries for the first year relating to the sales type lease on the books of the lessor.
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