Marianas Company adopted the policy of leasing as the constructed such a cargo vessel for Jade Company at a cost primary method of selling products. The entity's main product is a small cargo vessel. Marianas Company transferring to Jade Company at the end of the lease period. The terms of the lease provided for annual advance paymenta It is estimated that the cargo vessel will have a residual of P8,500,000. of P2,500,000 to be paid over 10 years with the ownership value of P1,600,000 at that date. The lease payments began at the beginning of current year Marianas Company incurred initial direct cost of P500.000 in financing the lease agreement with Jade Company. The sale price of the cargo vessel is P14,875,000, Financing the construction was at a 14% rate. The present value of an annuity due of 1 at 14% for 10 periods is 5.95. 1. What amount should be reported as gross profit on sale for the current year? a. 5,875,000 b. 6,375,000 c. 4,275,000 d. 4,775,000 2. What is the unearned interest income at the beginning of current year? a. 10,125,000 b. 11,725,000 с. 9,625,000 d. 8,525,000 3. What is the interest income for the current year? a. 2,082,500 b. 1,732,500 c. 2,306,500 d. 1,956,500

Marianas Company adopted the policy of leasing as the constructed such a cargo vessel for Jade Company at a cost primary method of selling products. The entity's main product is a small cargo vessel. Marianas Company transferring to Jade Company at the end of the lease period. The terms of the lease provided for annual advance paymenta It is estimated that the cargo vessel will have a residual of P8,500,000. of P2,500,000 to be paid over 10 years with the ownership value of P1,600,000 at that date. The lease payments began at the beginning of current year Marianas Company incurred initial direct cost of P500.000 in financing the lease agreement with Jade Company. The sale price of the cargo vessel is P14,875,000, Financing the construction was at a 14% rate. The present value of an annuity due of 1 at 14% for 10 periods is 5.95. 1. What amount should be reported as gross profit on sale for the current year? a. 5,875,000 b. 6,375,000 c. 4,275,000 d. 4,775,000 2. What is the unearned interest income at the beginning of current year? a. 10,125,000 b. 11,725,000 с. 9,625,000 d. 8,525,000 3. What is the interest income for the current year? a. 2,082,500 b. 1,732,500 c. 2,306,500 d. 1,956,500

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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