leased are payable at the end of each year, beginning December 31 cost was P800,000. The implicit rate in the lease is 12% which of the current year. The lease term is 6 years and the useful At the beginning of current year, Ultra Company leased The fair value of the equipment was P1,273,800 while the The lessee had the option to purchase the equipment for P80,000 at the end of the lease term. It is reasonably certain present value of an ordinary annuity of 1 at 12% for 6 periods The present value of 1 at 12% for 6 periods is 0.51 and the equipment to another entity under a sales type lease. Rentala Problem 14-19 (IAA) life of the equipment is 8 years. is known to the lessee. that the lessee shall exercise the purchase option. The present value of 1 at 12% for 6 periods is 0.51 and a is 4.11. 1. What amount should be recognized as annual rental payment? a. 194,647 b. 184,720 c. 300,000 d. 309,927 2. What amount should be reported initially as total financial revenue? a. 606,200 b. 526,200 c. 388,320 d. 920,000 3. What amount should be reported as gross income from the sale? a. 606,200 b. 473,800 c. 553,800 d. 0.