Problem 2 ABC Company signed a ten-year noncancelable lease agreement to lease a storage building to a lessee under a sales type lease at the start of this year. At the conclusion of each year, the agreement demanded equal rental payments. The building's fair market value is P7,530,000. The building's carrying amount, on the other hand, is P6,420,000. The structure has a twelve-year projected economic life and no residual value. The title to the building will be transferred to the lessee at the end of the lease. The yearly rental was established by ABC to ensure a 12% return on investment. The lessee is aware of the lessor's implicit rate. The entire yearly lease payment includes P300,000 in executory costs for property taxes. a. What is the minimum annual lease payment? b. What is the total annual lease payment?

Problem 2 ABC Company signed a ten-year noncancelable lease agreement to lease a storage building to a lessee under a sales type lease at the start of this year. At the conclusion of each year, the agreement demanded equal rental payments. The building's fair market value is P7,530,000. The building's carrying amount, on the other hand, is P6,420,000. The structure has a twelve-year projected economic life and no residual value. The title to the building will be transferred to the lessee at the end of the lease. The yearly rental was established by ABC to ensure a 12% return on investment. The lessee is aware of the lessor's implicit rate. The entire yearly lease payment includes P300,000 in executory costs for property taxes. a. What is the minimum annual lease payment? b. What is the total annual lease payment?

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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