Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased to another entity with the following provisions: Annual rental payable at the end of each year .......... .......... .......... .......... .......... .......... ......... 2,000,000 Lease term and useful life of machinery .......... .......... .......... .......... .......... .......... .......... ....... 5 years Cost of machinery.......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ......... 6,000,000 Residual value – unguaranteed.......... .......... .......... .......... .......... .......... .......... .......... .......... 1,000,000 Implicit interest rate.......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ....... 12% PV of an ordinary annuity of 1 for 5 periods at 12%.............................. .......... .......... .......... ... 3.60 PV of 1 for 5 periods at 12%.......... .......... .......... .......... .......... .......... .......... .......... .......... ... 0.57 There is no transfer of title nor bargain purchase option. 1. What amount should be reported as sales revenue? Group of answer choices 7,770,000 10,000,000 7,200,000 7,000,000 2. What is the interest income for 2023? Group of answer choices 932,400 864,000 840,000 880,000 3. What amount of cost of goods sold should be reported?
Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased to another entity with the following provisions:
Annual rental payable at the end of each year .......... .......... .......... .......... .......... .......... ......... 2,000,000
Lease term and useful life of machinery .......... .......... .......... .......... .......... .......... .......... ....... 5 years
Cost of machinery.......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ......... 6,000,000
Residual value – unguaranteed.......... .......... .......... .......... .......... .......... .......... .......... .......... 1,000,000
Implicit interest rate.......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ....... 12%
PV of an ordinary annuity of 1 for 5 periods at 12%.............................. .......... .......... .......... ... 3.60
PV of 1 for 5 periods at 12%.......... .......... .......... .......... .......... .......... .......... .......... .......... ... 0.57
There is no transfer of title nor bargain purchase option.
1. What amount should be reported as sales revenue?
2. What is the interest income for 2023?
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