On December 31,2019, ABC Company leased equipment to DEF Company for a 4 year period ending December 31,2023. The equipment cost ABC Company P 365,760 and has an estimated useful life of 5 years. Its normal sales price is P 365,760. The lessee guarantees a residual value of P 80,000. Lease payment is due every December 31 and DEF Company made the first payment on December 31,2019. ABC's implicit interest rate is 10%. If the residual value is not guaranteed, how much net investment in the lease shall be recognized on December 31,2019?
On December 31,2019, ABC Company leased equipment to DEF Company for a 4 year period ending December 31,2023. The equipment cost ABC Company P 365,760 and has an estimated useful life of 5 years. Its normal sales price is P 365,760. The lessee guarantees a residual value of P 80,000. Lease payment is due every December 31 and DEF Company made the first payment on December 31,2019. ABC's implicit interest rate is 10%. If the residual value is not guaranteed, how much net investment in the lease shall be recognized on December 31,2019?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On December 31,2019, ABC Company leased equipment to DEF Company for a 4 year period ending December 31,2023. The equipment cost ABC Company P 365,760 and has an estimated useful life of 5 years. Its normal sales price is P 365,760. The lessee guarantees a residual value of P 80,000. Lease payment is due every December 31 and DEF Company made the first payment on December 31,2019. ABC's implicit interest rate is 10%.
If the residual value is not guaranteed, how much net investment in the lease shall be recognized on December 31,2019?
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