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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Marianas Company adopted the policy of leasing as the
primary method of selling products. The entity's main
constructed such a cargo vessel for Jade Company at a cost
product is a small cargo vessel. Marianas Company
It is estimated that the cargo vessel will have a residual
of P2,500,000 to be paid over 10 years with the ownership
transferring to Jade Company at the end of the lease period
The terms of the lease provided for annual advance paymenta
Problem 14-17 (IAA)
of P8,500,000.
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?
10,125,000
b. 11,725,000
9,625,000
8,525,000
a.
с.
d.
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

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primary method of selling producte. The entity product is a amall cargo vessel. Marianas Company Marianas Company adopted the policy of leasingn constructed such a cargo veasel for Jade Company at a o It is estimated that the cargo vessel will have a reid Problom 14-17 (IAA) Marianas Company adopled the policy of product is a amall carg0 TO8sel. Marian of P8,600,000, The terms of the lease provided lor annunladvance pas payment o au vnn sreo6 or towo prod aq 01 000 00 transferring lo Jade Company af the end o/ The lease p It is estimated that the cargo vessel wil have a resid value of P1,600,000 at that date. The lease payments began at the beginning of current yo Mananas Company incurred initial direct coat of Ps00.ce in financing the lease agréement with Jade Company T sale price of the cargo vessel is Pl4,875,000. Financing the construction was at a l4% rate. The presem value of an annuity due of 1 at 14% for 10 periode is 50 What amount should be reported as groes profit on sal for…