MISTLETOE Company is a dealer in equipment. The entity leased equipment to a lessee on January 1, 2021 for an eight-year period expiring January 1, 2029. Equal annual payments under the lease are due at the end of each year beginning December 31, 2021. The lease agreement included a guaranteed residual value of P200,000 and an implicit rate of 10%. It was determined that the fair value of the asset is P3,000,000. The carrying amount is P2,500,000 and that the present value of the minimum lease payment at 10% is P2,760,900. The PV of 1 at 10% for 8 periods is 0.467, and the PV of an ordinary annuity of 1 at 10% for 8 periods is 5.335. Required: What is the total financial or interest revenue over the lease term?* ₱ 1,558,538 ₱ 1,379,156 ₱ 1,439,100 ₱ 1,498,594 How much is the gross investment that should be initially recognized as lease receivable? * ₱ 4,140,056 ₱ 4,000,000 ₱ 3,840,150 ₱ 3,000,000
MISTLETOE Company is a dealer in equipment. The entity leased equipment to a lessee on January 1, 2021 for an eight-year period expiring January 1, 2029. Equal annual payments under the lease are due at the end of each year beginning December 31, 2021. The lease agreement included a guaranteed residual value of P200,000 and an implicit rate of 10%. It was determined that the fair value of the asset is P3,000,000. The carrying amount is P2,500,000 and that the present value of the minimum lease payment at 10% is P2,760,900. The PV of 1 at 10% for 8 periods is 0.467, and the PV of an ordinary annuity of 1 at 10% for 8 periods is 5.335.
Required:
- What is the total financial or interest revenue over the lease term?*
₱ 1,558,538
₱ 1,379,156
₱ 1,439,100
₱ 1,498,594
-
How much is the gross investment that should be initially recognized as lease receivable? *
₱ 4,140,056
₱ 4,000,000
₱ 3,840,150
₱ 3,000,000
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