Michelle Company leased equipment to May Corporation on July 1, 2012 for an eight-year period expiring June 30, 2020. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 2012. The cash selling price of the equipment is P3,520,000 which reflects its present value, and the cost of the equipment on Michelle's accounting records is P2,800,000. The lease is appropriately recorded as a dealer's lease. What is the amount of the resulting gross profit from this sale at the inception of the lease? a. P45,000 b. P90,000 c. P720,000 d. P1,280,000 Use the same information given above, What other revenue should Michelle report in her income statement for year ended December 31, 2012? a. P292,000 b. P146,000 c. P176,000 d. P352,000 e. P0
Michelle Company leased equipment to May Corporation on July 1, 2012 for an eight-year period expiring June 30, 2020. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 2012. The cash selling price of the equipment is P3,520,000 which reflects its present value, and the cost of the equipment on Michelle's accounting records is P2,800,000. The lease is appropriately recorded as a dealer's lease. What is the amount of the resulting gross profit from this sale at the inception of the lease? a. P45,000 b. P90,000 c. P720,000 d. P1,280,000 Use the same information given above, What other revenue should Michelle report in her income statement for year ended December 31, 2012? a. P292,000 b. P146,000 c. P176,000 d. P352,000 e. P0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Michelle Company leased equipment to May Corporation on July 1, 2012 for an eight-year period expiring June 30, 2020. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 2012. The cash selling price of the equipment is P3,520,000 which reflects its present value, and the cost of the equipment on Michelle's accounting records is P2,800,000. The lease is appropriately recorded as a dealer's lease. What is the amount of the resulting gross profit from this sale at the inception of the lease?
a. P45,000
b. P90,000
c. P720,000
d. P1,280,000
Use the same information given above, What other revenue should
Michelle report in her income statement for year ended December 31, 2012?
a. P292,000
b. P146,000
c. P176,000
d. P352,000
e. P0
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