TOPIC: LEASESCompute for the following (show solution):a. How much total profit should Technocraft recognize for the year ended December 31, 2020?b. How much interest expense shall Marina Sands recognize for the year ended December 31, 2020?c. What amount shall Marina Sands report for the equipment at December 31, 2021?d. What amount of interest revenue should Technocraft report for the year ended December 31, 2020?e. What amount of financial asset shall Technocraft report at December 31, 2020? 3-14 Technocraft Company sells audio systems. It leases to MarinaSands Company on January 1, 2020 an audio equipment withcarrying value of P9,000,000, under the following terms:Guaranteed residual value of P2,000,000 at the end ofthe lease term of 5 years;Periodic payment every January 1 and July 1 ofP1,328,622 starts on January 1, 2020;Lessor's annual implicit interest rate, which is known byMarina Sands is 10%. Market rate of interest is also10%.Technocraft incurs commission and other costs related to thelease amounting to P100,000.

Profit from lease for the lessor is equal to the difference between the market lease rentals and the…

Answered: Compute for the following (show…

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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TOPIC: LEASES

Compute for the following (show solution):
a. How much total profit should Technocraft recognize for the year ended December 31, 2020?
b. How much interest expense shall Marina Sands recognize for the year ended December 31, 2020?
c. What amount shall Marina Sands report for the equipment at December 31, 2021?
d. What amount of interest revenue should Technocraft report for the year ended December 31, 2020?
e. What amount of financial asset shall Technocraft report at December 31, 2020?

3-14 Technocraft Company sells audio systems. It leases to Marina
Sands Company on January 1, 2020 an audio equipment with
carrying value of P9,000,000, under the following terms:
Guaranteed residual value of P2,000,000 at the end of
the lease term of 5 years;
Periodic payment every January 1 and July 1 of
P1,328,622 starts on January 1, 2020;
Lessor's annual implicit interest rate, which is known by
Marina Sands is 10%. Market rate of interest is also
10%.
Technocraft incurs commission and other costs related to the
lease amounting to P100,000.

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