Juliet Company is in the business for leasing new sophisticated equipment. As lessor, Juliet Company expects a 12% return on its net investment. All leases are classified as direct financing lease. At the end of the lease term, the equipment will revert to Juliet Company. On January 1, 2020, an equipment is leased to a lessee with the following information: Cost of equipment to Juliet Company Residual value – unguaranteed Annual rental payable in advance Useful life and lease term P5,250,000 P600,000 P900,000 8 years 12% Implicit lease payment First lease payment January 1, 2020 What is the unearned interest income on January 1, 2020? What is the interest income that should be recognized for 2020?

Juliet Company is in the business for leasing new sophisticated equipment. As lessor, Juliet Company expects a 12% return on its net investment. All leases are classified as direct financing lease. At the end of the lease term, the equipment will revert to Juliet Company. On January 1, 2020, an equipment is leased to a lessee with the following information: Cost of equipment to Juliet Company Residual value – unguaranteed Annual rental payable in advance Useful life and lease term P5,250,000 P600,000 P900,000 8 years 12% Implicit lease payment First lease payment January 1, 2020 What is the unearned interest income on January 1, 2020? What is the interest income that should be recognized for 2020?

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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