Oxana Electronics is a financing business, leasing equipment to various entities. It acquired an equipment for a cost of P2,300,000. It immediately leased the equipment to Sushmita & Co. on January 1, 2020. Lease term is 6 years, and after the end of the lease term, title will transfer to the lessee. Annual lease payments are made at the start of each year, starting January 1, 2020. The machine’s residual value is P200,000. Implicit rate of the lease is 12%. Below PV factors are provided in relation to the implicit rate: · PV of annuity in advance at 12% for 6 periods: 4.60 · PV of 1 at 12% for 6 periods: 0.51 How much is the annual rental? a. 477,826 b. 500,000 c. 559,610 d. 460,000
Oxana Electronics is a financing business, leasing equipment to various entities. It acquired an equipment for a cost of P2,300,000. It immediately leased the equipment to Sushmita & Co. on January 1, 2020. Lease term is 6 years, and after the end of the lease term, title will transfer to the lessee. Annual lease payments are made at the start of each year, starting January 1, 2020. The machine’s residual value is P200,000. Implicit rate of the lease is 12%. Below PV factors are provided in relation to the implicit rate: · PV of annuity in advance at 12% for 6 periods: 4.60 · PV of 1 at 12% for 6 periods: 0.51 How much is the annual rental? a. 477,826 b. 500,000 c. 559,610 d. 460,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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Oxana Electronics is a financing business, leasing equipment to various entities. It acquired an equipment for a cost of P2,300,000. It immediately leased the equipment to Sushmita & Co. on January 1, 2020. Lease term is 6 years, and after the end of the lease term, title will transfer to the lessee. Annual lease payments are made at the start of each year, starting January 1, 2020. The machine’s residual value is P200,000. Implicit rate of the lease is 12%. Below PV factors are provided in relation to the implicit rate:
· PV of annuity in advance at 12% for 6 periods: 4.60
· PV of 1 at 12% for 6 periods: 0.51
How much is the annual rental?
· PV of annuity in advance at 12% for 6 periods: 4.60
· PV of 1 at 12% for 6 periods: 0.51
How much is the annual rental?
a. 477,826
b. 500,000
c. 559,610
d. 460,000
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