Ricky Company is a dealer in property. On January 1, 2020, the entity entered into a finance lease with Peter Inc. under which it would pay P200,000 every January 1 commencing in 2020. The lease contract contains 5 years of lessor-lessee relationship. The cost of the car is P600,000 and its fair value is P750,000. To secure a formal turnover of rights, Ricky paid legal fees of P20,000 to an attorney in arranging the lease with the courts. What amount of gross profit on sale should be recognized for the year ended December 31, 2020?  a. P150,000 b. P130,000 c. P20,000 d. P0

Q: On January 1, 2020, Pia Co. engages in a lease contract to rent a property from Iris, Inc for an…

A: Present value of lease (right of use asset) = (Annual payment payable x  PV of advance annuity for 5…

Q: 15. Ricky Company is a dealer in property. On January 1, 2020, the entity entered into a finance…

A: Total cost of sale = cost of the car + legal fees  = P600,000  + P20,000 = P620,000

Q: On January 1, 2024, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period…

A: Lease is defined as a contractual agreement incorporated between two business entities where one…

Q: m D. Corp. decided to enter the leasing business. Dumbrique acquired a specialized packaging machine…

A: Annual lease payment can be calculated as the equivalent annual payment made for cost of equipment.

Q: Aokiji Company is a car dealer. On January 1, 2020, the entity entered into a finance lease with a…

A: The finance lease helps the lessee to acquire the asset and pay on instalments every year.

Q: Angelo Company decided to enter the leasing business. The entity acquired a specialized packaging…

A: Given information, Acquisition cost of the machine =P2,300,000 Residual value of the machine…

Q: ABC Company decided to enter the leasing business. The entity acquired a specialized packaging…

A: Present value of residual value of the machine = residual value of the machine x present value of 1…

Q: Oxana Electronics is a financing business, leasing equipment to various entities. It acquired an…

A: Present value of lease receivables net of residual value  = equipment cost - (residual value x PV of…

Q: On January 1, 2020, Morris Company sells land to Lopez Corporation for $10,000,000, and immediately…

A: The following transactions are journalized in the books of Morris Company to show the treatment of…

Q: On January 2, 2020, Guitar Company leased a warehouse to Violin Corporation under an operating lease…

A: As per IFRS 16, Lease incentive given by lessor is reduced by lessee while computing lease…

Q: Ebasan Company leased a building to Bu Corporation on January 1 2021. The lease expires on January 1…

A: Note Amount Annual Rental   3,00,000 Lease Bonus (500000/5) 1 1,00,000 Less:  Real Estate…

Q: Britney Co. has a factory equipment with a carrying amount of P700,000 and has a remaining useful…

A: Sale and lease back is a contract in which the lessee sale the asset thati s owned ny him to buyer…

Q: lpha Company was P1,377,480 which approximates the fair value on the lease date. The expected…

A: Lease payments are payments made by a lessee under a lease agreement to the lessor, who is the owner…

Q: Maureen Inc. is a dealer of machinery. On January 1, 2020, it leased a machinery to another entity…

A: Present value of lease receivables = (Annual payment payable x  PV of ordinary annuity for 5 periods…

Q: Indiana Ltd decided to lease from Jones Ltd a car that had a fair value at 30 June 2019 of $38  960.…

A: Lease is an agreement between two parties under which one party grants the right to use the asset to…

Q: On June 1, 2021, Blossom & Sons sold equipment to James Landscaping Service in exchange for a…

A: Note means an instrument acknowledging as debt due from one party to another party. It carry defined…

Q: What amount should be recognized as interest income for 2019? 194,160 154,160 172,400 128,000…

A: Taking into consideration the time value of money, the Present Value of Lease Payments indicates the…

Q: An entity is a manufacturer of machinery. It uses lease agreements to sell its product, On January…

A: Solution: Amount of sales revenue should be recognized by entity = Present value lease payments +…

Q: On January 1, 2020, an entity sold a new car at a price of P1,000,000 with production cost of…

A: Under Installment method to account its credit sales , the profit transaction of sales is recorded…

Q: 16. On January 1, 2020, Roque Company purchased a new machine for P6,000,000 for the purpose of…

A: Monthly rental (4,800,000 x 9/12)            =3,600,000 Lease bonus ( 600,000 x 9/36)…

Q: CUPID Corporation leased equipment to a lessee on April 1, 2021 for an eight-year period expiring…

A: Profit on the sale be reported for 2021 = list selling price of the equipment - carrying amount

Q: Baltimore Ltd entered into a contract to acquire a vehicle from Bryanston Motors. The lease term as…

A: 1.2.1  The provided transaction is a lease in accordance with the IFRS 16 because the above scenario…

Q: Christina Co. has a factory equipment with a carrying amount of P700,000 and has a remaining useful…

A: LeaseThe agreement is formed by 2 parties where one party lends the asset and the other person uses…

Q: Pucca Co. is a dealer of equipment and uses finance lease to facilitate the sale of its products.…

A: Pucca Co. is a dealer of equipment and uses finance lease to facilitate the sale of its products.…

Q: PRIMAX BHD signed a five-year contract to lease a machinery to LM BHD on 1 January 2020. The…

A: GIVEN DATA    PRIMAX BHD signed a five-year contract to lease a machinery to LM BHD on 1 January…

Q: Herald Company is a dealer in equipment. On January 1, 2020, an equipment was leased to another…

A:

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.