On January 01, 2012, PC Options sold equipment to PC Madness and simultaneously leased it back. Pertinent information at this date are presented below. In the initial entry upon leaseback, how much is the gain to be recognized by the buyer-lessor? * Sales price P 9,000,000 Fair value 8,000,000 Carrying amount 7,200,000 Annual rental payable at the end of each year 600,000 Remaining life 20 Lease term 4 Interest rate on the lease contract 12% Borrowing rate of PC Options 11% Borrowing rate of PC Madness 10.50%

On January 01, 2012, PC Options sold equipment to PC Madness and simultaneously leased it back. Pertinent information at this date are presented below. In the initial entry upon leaseback, how much is the gain to be recognized by the buyer-lessor? * Sales price P 9,000,000 Fair value 8,000,000 Carrying amount 7,200,000 Annual rental payable at the end of each year 600,000 Remaining life 20 Lease term 4 Interest rate on the lease contract 12% Borrowing rate of PC Options 11% Borrowing rate of PC Madness 10.50%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Use the same information in above, How much is the rental income to be recognized in the 2012 statement of comprehensive income of the buyer-lessor?

a. P600,000

b. P329,272

c. P300,000

d. P270,728

On January 01, 2012, PC Options sold equipment to PC Madness and
simultaneously leased it back. Pertinent information at this date are
presented below. In the initial entry upon leaseback, how much is the gain
to be recognized by the buyer-lessor? *
Sales price
P 9,000,000
Fair value
8,000,000
Carrying amount
7,200,000
Annual rental payable at the end of each year
600,000
Remaining life
20
Lease term
4
Interest rate on the lease contract
12%
Borrowing rate of PC Options
11%
Borrowing rate of PC Madness
10.50%
а. Р800,000
b. P720,000
O c. P400,000
O d. P717,780

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