Interest rate implicit in the lease: 10% Unguaranteed residual value: P150,000 • Initial direct cost: P20,000 The lease reverts to Maroon Co. at the end of the lease term. Note: Round-off present value factors to four decimal places. Round-off cents to peso. How much is the total interest income to be earned over the lease term?
Interest rate implicit in the lease: 10% Unguaranteed residual value: P150,000 • Initial direct cost: P20,000 The lease reverts to Maroon Co. at the end of the lease term. Note: Round-off present value factors to four decimal places. Round-off cents to peso. How much is the total interest income to be earned over the lease term?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On January 2, 2021, Maroon Co., a dealer of machines, leased a
machine to Green Co. Data relating to the lease are as follows:
• Useful life of the equipment: 5 years
• Lease term: 5 years
Annual rent payable at the end of the year: P500,000
• Interest rate implicit in the lease: 10%
Unguaranteed residual value: P150,000
• Initial direct cost: P20,000
The lease reverts to Maroon Co. at the end of the lease term.
Note: Round-off present value factors to four decimal places. Round-off
cents to peso.
How much is the total interest income to be earned over the lease
term?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F381b3ebe-4cfa-4751-bab5-7424913f1a98%2Fbcf2e4d5-8b15-48b7-9a2e-7b4662fd73e8%2Fqiyfq7a_processed.png&w=3840&q=75)
Transcribed Image Text:On January 2, 2021, Maroon Co., a dealer of machines, leased a
machine to Green Co. Data relating to the lease are as follows:
• Useful life of the equipment: 5 years
• Lease term: 5 years
Annual rent payable at the end of the year: P500,000
• Interest rate implicit in the lease: 10%
Unguaranteed residual value: P150,000
• Initial direct cost: P20,000
The lease reverts to Maroon Co. at the end of the lease term.
Note: Round-off present value factors to four decimal places. Round-off
cents to peso.
How much is the total interest income to be earned over the lease
term?
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