On January 1, 20x1, PETRIFY Financing Co. leased equipment to STUN, Inc. Information on the lease is shown below. Cost of equipment Useful life of equipment P697,370 5 years 4 years Lease term Annual rent payable at the start of each year Interest rate implicit in the lease 200,000 10% Requirements: Compute for the following: a. Gross investment in the lease on January 1, 20x1. b. Net investment in the lease on January 1, 20x1. c. Total interest income (finance income) to be recognized by PETRIFY over the lease term.

On January 1, 20x1, PETRIFY Financing Co. leased equipment to STUN, Inc. Information on the lease is shown below. Cost of equipment Useful life of equipment P697,370 5 years 4 years Lease term Annual rent payable at the start of each year Interest rate implicit in the lease 200,000 10% Requirements: Compute for the following: a. Gross investment in the lease on January 1, 20x1. b. Net investment in the lease on January 1, 20x1. c. Total interest income (finance income) to be recognized by PETRIFY over the lease term.

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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