On December 31, 2012, BTS Company sold a machine to GOT Co and simultaneously leased it back for one year. The sales price of the machine was P480, 000, the carrying amount is P420,000, and it had an estimated remaining useful life of 14 years. The present value of the rental payments for one year is P35, 000. At December 31, 2019, how much should BTS Company report as deferred revenue from the sale of the machine?

On December 31, 2012, BTS Company sold a machine to GOT Co and simultaneously leased it back for one year. The sales price of the machine was P480, 000, the carrying amount is P420,000, and it had an estimated remaining useful life of 14 years. The present value of the rental payments for one year is P35, 000. At December 31, 2019, how much should BTS Company report as deferred revenue from the sale of the machine?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

See similar textbooks

Similar questions

On December 31, 2019, Hairy Inc. Sold computer equipment to Barber Co and immediately leased it back for 10 years. The sales price of the equipment was P560, 000, its carrying amount is P400, 000, and its estimated economic life is 12 years. Determine the amount of deferred revenue to be reported from the sale of the computer equipment on December 31, 2012.
On December 31, 2021, Trixie Company sold a machine to another entity and simultaneously leased it back for one year. Pertinent information at this date follows: Sale Price-3,600,000, Carrying Amount-3,300,000, Present value of reasonable rentals-341,000, Estimated remaining useful life of machine-12 years. What amount of revenue from sale of the machine should be reported in 2021? 341,000 300,000 41,000 0
On March 20, 2021, Barnes Company purchased a machine for P2,400,000 for the purpose of leasing it to others. The machine is expected to have a 10 year life and no residual value. It will be depreciated on the straight line base computed to the nearest month. The machine was leased to Rally Company on April 1, 2021 for 4 years at a monthly rental of P36,000. Barnes Company paid P120,000 initial direct costs associated with negotiating the lease in March 2021. 1. The machinery would be reported in the financial statements on December 31, 2021 at:
Yellow Company, a distributor of machinery, bought a machine from the manufacturer in November 2020 for P500,000. On December 30, 2020, the entity sold this machine for P750,000 under the following terms: 2% discount if paid within 30 days, 1% discount if paid after 30 days, or payabl e in full within ninetydays if not paid within the discount periods. However, the customer had the right to return this machine to Yellow Company if it was unable to resell the machine before the expiration of the ninety-day payment period, in which case the customer’s obligation to Yellow Company would be canceled. In the net sales for the year ended december 31,2020, what amount should be included for the sale of the machine? a. 750,000 b. 735,000 c. 742,500 d. 0
On August 1, 2022, Mendez Corporation purchased a new machine on a deferred payment basis. A down payment of €2,000 was made and 4 annual installments of €6,000 each are to be made beginning on September 1, 2022. The cash equivalent price of the machine was €23,000. Due to an employee strike, Mendez could not install the machine immediately, and thus incurred €300 of storage costs. Costs of installation (excluding the storage costs) amounted to €800. The amount to be capitalized as the cost of the machine is :- €23,000. €23,800 €26,000. €24,100
On August 1, 2018, Banco Company purchased a new machine on a deferred payment basis. A down payment of P 100 000 was made and 4 monthly installments of P 250 000 each are to be made beginning on September 1, 2018. The cash equivalent price of the machine was P 950 000. The entity incurred and paid installation costs amounting to P 30 000. What is the amount to be capitalized as cost of the machine?
Maris Co. purchased a machine on January 1, 2021, for $2,500,000 for the express purpose of leasing it. The machine is expected to have a five-year life, with no salvage value, and be depreciated on a straight-line monthly basis. On January 1, 2021, Maris leased the machine to Dunbar Company for $750,000 a year for a four-year period with an implicit rate of 6%. Payments are due to Maris on January 1 of each year starting in 2021. This is an operating lease from the lessee perspective. a. Create the journal entries for the lessee, Dunbar, for January 1, 2021 b. Create the journal entries for the lessee, Dunbar, for December 31, 2021.
On August 1, 2021, FAITH Inc purchased a new machine on a deferred payment basis. A down payment of P200,000 was made and 4 annual instalments of P300,000 each are to be made beginning on August 1, 2022. An interest rate of 6% reflects the time value of money for this type of loan agreement. Due to an employee strike, the company could not install the machine immediately, and thus incurred P30,000 of storage costs. Costs of installation (excluding the storage costs) amounted to P80,000. What is the capitalized cost of the machine? Round-off your final answer to the nearest peso.
A corporation bought a machine for RP 8,000 with a commercial useful life of 4 years and a fiscal useful life of 3 years, but no salvage value, in early 2019. In both commercial and fiscal terms, machines are assembled utilizing the straight-line method. In addition, the company will receive Rp. 6,000 in 2019, with the warranty charge anticipated to be 10% of revenue. The warranty cost is due in fiscal year 2022. The general rate of taxation is 30%. Required: Calculate and explain the deferred tax asset or obligation for the two transactions at the end of 2019!
On January 2, 2020, ABC Co. purchased a machine on credit terms 2/10, n/30. The invoice price was P40,000. Additional costs incurred in connection with the machine are as follows: Transportation-in: P1,200 Installation cost: P700 Testing costs prior to regular operation: P550 If the invoice is paid February 1, the acquisition cost of the machine must be a. P41,650 b. P41,100 c. P40,400 d. P39,200 e. answer not given
On August 1, 2014, Bright Company purchased a new machine on a deferred payment basis. A down payment of P100,000 was made and 4 monthly installments of P250,000 each are to be made beginning on August 1, 2014. The terms of the agreement is not considered normal. The cash equivalent price of the machine was P950,000. Bright incurred and paid installation costs amounting to P30,000. How much should be capitalized as cost of the machine.
On January 1, 2019, Pag-asa Co. sold a machine to Estudyante Co.. In lieu of cash payment, Estudyante Co. gave Pag-asa Co. 2-year, P200,000, 12.4% note. The note requires interest to be paid semi-annually on June 30 and December 31.The machinery has a cost of P500,000 and accumulated depreciation as of January 1, 2019 of P320,000. The prevailing rate of interest for a note of this type is 16.7% and the principal amount of the note is to be paid in four equal semi-annual installments every June 30 and December 31. What is the current portion of the notes receivable, December 31, 2019? a. 96,100 b. 96,600 c. 97,100 d. 98,600