At the beginning of current year, Jade Company purchased a new machine for P4,800,000 and leased it to East the same day. The machine has an estimated 12-year life and will be depreciated P400,000 per year. The lease is for a three-year period at an annual rental of P850,000. Additionally, East paid P300,000 to Jade as a lease bonus to obtain the three-year lease. Jade incurred insurance expense of P80,000 for the leased machine during the current year. What is the operating profit of the lessor on the leased asset for the current year?
At the beginning of current year, Jade Company purchased a new machine for P4,800,000 and leased it to East the same day. The machine has an estimated 12-year life and will be depreciated P400,000 per year. The lease is for a three-year period at an annual rental of P850,000. Additionally, East paid P300,000 to Jade as a lease bonus to obtain the three-year lease. Jade incurred insurance expense of P80,000 for the leased machine during the current year. What is the operating profit of the lessor on the leased asset for the current year?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
At the beginning of current year, Jade
Company purchased a new machine for
P4,800,000 and leased it to East the same day.
The machine has an estimated 12-year life and
will be
is for a three-year period at an annual rental of
P850,000.
Additionally, East paid P300,000 to Jade as a
lease bonus to obtain the three-year lease. Jade
incurred insurance expense of P80,000 for the
leased machine during the current year.
What is the operating profit of the lessor on the
leased asset for the current year?
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