On January 1, 2020, Bacarra Company leased an asset for a term of six years. Annual rentals of P500,000 is payable every yearend. The cost of the leased asset is P2,100,000. Initial direct costs paid by Bacarra totaled P6,360. The asset will revert to Bacarra at the end of the lease term, when its residual value would amount to P100,000. Assume it is a sales-type lease with an implicit rate of 10% and the residual value is guaranteed, how much is the net income from the lease to be reported in 2020?
On January 1, 2020, Bacarra Company leased an asset for a term of six years. Annual rentals of P500,000 is payable every yearend. The cost of the leased asset is P2,100,000. Initial direct costs paid by Bacarra totaled P6,360. The asset will revert to Bacarra at the end of the lease term, when its residual value would amount to P100,000. Assume it is a sales-type lease with an implicit rate of 10% and the residual value is guaranteed, how much is the net income from the lease to be reported in 2020?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 1, 2020, Bacarra Company leased an asset for a term of six years. Annual rentals of P500,000 is payable every yearend. The cost of the leased asset is P2,100,000. Initial direct costs paid by Bacarra totaled P6,360. The asset will revert to Bacarra at the end of the lease term, when its residual value would amount to P100,000.
Assume it is a sales-type lease with an implicit rate of 10% and the residual value is guaranteed, how much is the net income from the lease to be reported in 2020?
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