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On December 31, 2021, Maroon Co. leased an equipment with a cost of P2,000,000 to Green Co. for 5-years, which is also the useful life of the asset. The lease agreement specifies equal annual payment of P467,273 beginning on December 31, 2021. At the end of the lease term, the equipment will revert to Maroon Co. A third party related to the lease guarantees the residual value of the equipment amounting to P200,000. The rate implicit in the lease is 12%. How much is the total interest income to be earned over the lease term?

On December 31, 2021, Maroon Co. leased an equipment with a cost of P2,000,000 to Green Co. for 5-years, which is also the useful life of the asset. The lease agreement specifies equal annual payment of P467,273 beginning on December 31, 2021. At the end of the lease term, the equipment will revert to Maroon Co. A third party related to the lease guarantees the residual value of the equipment amounting to P200,000. The rate implicit in the lease is 12%. How much is the total interest income to be earned over the lease term?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On December 31, 2021, Maroon Co. leased an equipment with a cost of P2,000,000 to Green Co. for 5-years, which is also the useful life of the asset. The lease agreement specifies equal annual payment of P467,273 beginning on December 31, 2021. At the end of the lease term, the equipment will revert to Maroon Co. A third party related to the lease guarantees the residual value of the equipment amounting to P200,000. The rate implicit in the lease is 12%. How much is the total interest income to be earned over the lease term?
Transcribed Image Text:On December 31, 2021, Maroon Co. leased an equipment with a cost of P2,000,000 to Green Co. for 5-years, which is also the useful life of the asset. The lease agreement specifies equal annual payment of P467,273 beginning on December 31, 2021. At the end of the lease term, the equipment will revert to Maroon Co. A third party related to the lease guarantees the residual value of the equipment amounting to P200,000. The rate implicit in the lease is 12%. How much is the total interest income to be earned over the lease term?
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