On January 1, 20x1, Chantaly Bars Co. leased equipment to NJA Inc. Information on the lease is shown below: Cost of equipment ₱ 2,400,000 Useful life of equipment 5 years Lease term 4 years Annual rent payable at the start of each year 800,000 Interest rate implicit in the lease 10% Initial direct costs amounted to Php 160,000. The lease qualifies for sales type lease accounting. (Please only answer the highlighted questions) a. How much is the gross investment in the lease and the net investment in the lease on January 1, 20x1? b. How much is the total interest income (finance income) to be recognized by Chantaly Bars over the lease term? c. How much is the gross profit from the sale? d. How much is the net profit from the sale?
On January 1, 20x1, Chantaly Bars Co. leased equipment to NJA Inc.
Information on the lease is shown below:
Cost of equipment ₱ 2,400,000
Useful life of equipment 5 years
Lease term 4 years
Annual rent payable at the start of each year 800,000
Interest rate implicit in the lease 10%
Initial direct costs amounted to Php 160,000. The lease qualifies for
sales type lease accounting.
(Please only answer the highlighted questions)
a. How much is the gross investment in the lease and the net investment in the lease on January 1, 20x1?
b. How much is the total interest income (finance income) to be
recognized by Chantaly Bars over the lease term?
c. How much is the gross profit from the sale?
d. How much is the net profit from the sale?
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