On January 1, 20x1, IMBROGLIO Co. (lessor) leased a piece of equipment to COMPLICATION, Inc. Information on the lease is shown below:Cost of equipment₱1,200,000Useful life of equipment5 yearsLease term4 yearsAnnual rent payable at the start of each year₱400,000Interest rate implicit in the lease10%IMBROGLIO Co. incurred initial direct costs of ₱80,000. What amount of net selling profits should IMBROGLIO recognize at the lease commencement date if the lease is accounted for as a sales type lease?1.194,7402.03.125,2594. 114,741

Annual rent payable at the start of each year P4,00,000 Present value of an annuity due of 1 at…

Answered: On January 1, 20x1, IMBROGLIO Co.…

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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On January 1, 20x1, IMBROGLIO Co. (lessor) leased a piece of equipment to COMPLICATION, Inc. Information on the lease is shown below:

Cost of equipment	₱1,200,000
Useful life of equipment	5 years
Lease term	4 years
Annual rent payable at the start of each year	₱400,000
Interest rate implicit in the lease	10%

IMBROGLIO Co. incurred initial direct costs of ₱80,000. What amount of net selling profits should IMBROGLIO recognize at the lease commencement date if the lease is accounted for as a sales type lease?

1.194,740

2.0

3.125,259

4. 114,741

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