Problem 3 On January 1, 2022, ABC Company signed into a leasing arrangement with XYZ Company for a machine that was valued at P3,500,000 in ABC's financial records. The lease runs through December 31, 2028 and every year on January 1st, payments of P855,300 are required. The seven percent interest rate set in the lease is deemed reasonable and appropriate compensation for ABC's use of its money. The machine will have a 7-year life, no residual value, and will be depreciated on a straight line basis, according to XYZ. The lease is designed to be a sales lease. For the fiscal year ending December 31, 2022, determine the following: a. ABC's gross income from sales b. ABC's interest income ABC's pretax total income from the lease с.

Problem 3 On January 1, 2022, ABC Company signed into a leasing arrangement with XYZ Company for a machine that was valued at P3,500,000 in ABC's financial records. The lease runs through December 31, 2028 and every year on January 1st, payments of P855,300 are required. The seven percent interest rate set in the lease is deemed reasonable and appropriate compensation for ABC's use of its money. The machine will have a 7-year life, no residual value, and will be depreciated on a straight line basis, according to XYZ. The lease is designed to be a sales lease. For the fiscal year ending December 31, 2022, determine the following: a. ABC's gross income from sales b. ABC's interest income ABC's pretax total income from the lease с.

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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Problem 1: Harry Potter Castle (HPC) leased equipment from Helen's Leasing Co. on July 1, 2024, in a sales-type lease. The present value of the lease payments discounted at 10% was $80,000. Ten annual lease payments of $12,000 are due each July 1, beginning July 1, 2024. The total decrease in earnings (pretax) in HPC's Dec. 31, 2024, income statement would be: Your answer:
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6 Company A (lessee) has reached a lease agreement with Company B (assor) to kase a new carpet weaving machine beginning January 1, Year 1. The lease agreement contains the following information • The lease is for five years, requiring annual payments of $10,355.67 at the beginning of the year. • The weaving machine has a fair value at the beginning of the lease of $50,000; an estimated economic life of five years; and a guaranteed residual value of $2,500 (Company A expects that the value will be greater). • Present value of the weaving machine is $47,945.18. • There are no renewal options. At the end of the lease, the weaving machine will be returned to Company B. • Company A depreciates similar equipment that it purchases on a straight-line basis. • Company B sels the annual lease rate al 5% and Company A is aware of the rate. • The lease is a finance lease. COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment Date January 1, Year 1 January 1, Year 1 January…
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Problem 1 At the beginning of 2022, EVS Industries acquired a machine with fair value of P6,074,700 by signing a 4-year lease, which is the expected useful life of the machine passing. The lease is payable in four equal annual payments of P2 million at the end of each year. The implicit rate in the lease is 12% 23. What is EVS's lease liability at December 31, 2023?
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Subject: acounting
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