On January 1, 2019 VT Company sold equipment with an estimated useful life of 5 years. At the same time VT Company leased back the equipment for 2 years under a lease classified as operating lease. The sales price (fair value) of the equipment was P212, 700, the carrying amount is P300,000, the monthly rental under the lease is P6,000 and the present value of the rental payments is P115,753. For the year ended December 31, 2012, determine which items would be reported on its income statement for sale-leaseback transaction.

On January 1, 2019 VT Company sold equipment with an estimated useful life of 5 years. At the same time VT Company leased back the equipment for 2 years under a lease classified as operating lease. The sales price (fair value) of the equipment was P212, 700, the carrying amount is P300,000, the monthly rental under the lease is P6,000 and the present value of the rental payments is P115,753. For the year ended December 31, 2012, determine which items would be reported on its income statement for sale-leaseback transaction.

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...

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