On January 1,2020, an equipment of ABC Company with a carrying value of P 1,500,000 was sold at P 2,000,000 equal to its fair value to DEF Company. ABC immediately leased back the equipment from DEF Company with an annual rental of P 150,000 for 5 years, payable every December 31 of each year. The market rate of interest is 10%. How much is the gain on sale leaseback to be recognized by ABC Company? (For present value factors, do not round off) P 568,618.02 P 426,463.51 P 1,073,536.49 P 357,845.49
On January 1,2020, an equipment of ABC Company with a carrying value of P 1,500,000 was sold at P 2,000,000 equal to its fair value to DEF Company. ABC immediately leased back the equipment from DEF Company with an annual rental of P 150,000 for 5 years, payable every December 31 of each year. The market rate of interest is 10%. How much is the gain on sale leaseback to be recognized by ABC Company? (For present value factors, do not round off) P 568,618.02 P 426,463.51 P 1,073,536.49 P 357,845.49
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1,2020, an equipment of ABC Company with a carrying value of P 1,500,000 was sold at P 2,000,000 equal to its fair value to DEF Company. ABC immediately leased back the equipment from DEF Company with an annual rental of P 150,000 for 5 years, payable every December 31 of each year. The market rate of interest is 10%.
How much is the gain on sale leaseback to be recognized by ABC Company? (For present value factors, do not round off)
How much is the gain on sale leaseback to be recognized by ABC Company? (For present value factors, do not round off)
P 568,618.02
P 426,463.51
P 1,073,536.49
P 357,845.49
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