Happy Corporation leased equipment to Great Company on January 1, 2021. The lease is for an eight-year period expiring on December 31, 2028. The first of eight equal annual payments of P900,000 was made on January 1, 2021 and subsequent payments will be made every January 1 thereafter. Happy Corporation had purchased the equipment on December 29, 2020 for P4,800,000. Happy paid P150,000 in connection with negotiating and arranging the lease. The lease is appropriately accounted for as a dealer's lease by Happy. The present value on January 1, 2021 of all rent payments over the lease term discounted at a 10% interest rate was P5,280,000. What is Happy Corporation's net investment in the lease on December 31, 2021? * O P4,818,000 O P4,380,000 O P4,309,000 O P3,918,000
Happy Corporation leased equipment to Great Company on January 1, 2021. The lease is for an eight-year period expiring on December 31, 2028. The first of eight equal annual payments of P900,000 was made on January 1, 2021 and subsequent payments will be made every January 1 thereafter. Happy Corporation had purchased the equipment on December 29, 2020 for P4,800,000. Happy paid P150,000 in connection with negotiating and arranging the lease. The lease is appropriately accounted for as a dealer's lease by Happy. The present value on January 1, 2021 of all rent payments over the lease term discounted at a 10% interest rate was P5,280,000. What is Happy Corporation's net investment in the lease on December 31, 2021? * O P4,818,000 O P4,380,000 O P4,309,000 O P3,918,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Happy Corporation leased equipment to Great Company on January 1, 2021. The lease is for an
eight-year period expiring on December 31, 2028. The first of eight equal annual payments of
P900,000 was made on January 1, 2021 and subsequent payments will be made every January 1
thereafter.
Happy Corporation had purchased the equipment on December 29, 2020 for P4,800,000. Happy
paid P150,000 in connection with negotiating and arranging the lease. The lease is appropriately
accounted for as a dealer's lease by Happy. The present value on January 1, 2021 of all rent
payments over the lease term discounted at a 10% interest rate was P5,280,000.
What is Happy Corporation's net investment in the lease on December 31, 2021? *
O P4,818,000
O P4,380,000
O P4,309,000
O P3,918,000
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