On December 31, 2019, Beam Company leased equipment to Forth Company for a four-year period ending December 31, 2023. The equipment cost Beam Company P365,760 and has an expected useful life of five years. Its normal sales price is P365,760. The lessee guarantees the residual value of P80,000. Lease payment is due every December 31 and Forth Company made the first payment on December 31, 2019. Beam Company’s implicit interest rate is 10%. 1. How much is the net investment in the lease at December 31, 2020? A. P276,537 B. P214,968 C. P304,191 D. P313,113 2. If the residual value is not guaranteed, how much net investment in the lease shall be recognized on December 31 A. P365,760 B. P356,760 C. P311,210 D. P311,120
On December 31, 2019, Beam Company leased equipment to Forth Company for a four-year period ending December 31, 2023. The equipment cost Beam Company P365,760 and has an expected useful life of five years. Its normal sales price is P365,760. The lessee guarantees the residual value of P80,000. Lease payment is due every December 31 and Forth Company made the first payment on December 31, 2019. Beam Company’s implicit interest rate is 10%. 1. How much is the net investment in the lease at December 31, 2020? A. P276,537 B. P214,968 C. P304,191 D. P313,113 2. If the residual value is not guaranteed, how much net investment in the lease shall be recognized on December 31 A. P365,760 B. P356,760 C. P311,210 D. P311,120
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On December 31, 2019, Beam Company leased equipment to Forth Company for a four-year period ending December 31, 2023. The equipment cost Beam Company P365,760 and has an expected useful life of five years. Its normal sales price is P365,760. The lessee guarantees the residual value of P80,000. Lease payment is due every December 31 and Forth Company made the first payment on December 31, 2019. Beam Company’s implicit interest rate is 10%.
1. How much is the net investment in the lease at December 31, 2020?
A. P276,537 B. P214,968 C. P304,191 D. P313,113
2. If the residual value is not guaranteed, how much net investment in the lease shall be recognized on December 31
A. P365,760 B. P356,760 C. P311,210 D. P311,120
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education