Sony Inc. is a lessor-manufacturer of expensive machinery. On January 1,2011, a machinery is leased to another entity with the following information: Annual rental payable at the end of each year P200,000 Lease term 4 years Useful life of machinery 5 years Cost of Machinery 300,000 Estimated residual value 50,000 Initial direct cost paid by lessor 20,000 Incremental borrowing rate of lessee 14% Implicit interest rate of lessor known to lessee 12% Note: At the end of the lease term on December 31,2014, the machinery will revert to lessor. Problem 17. Except from the fact that the leased machinery will not revert to lesser because there is bargain purchase option of P50,000 at the end of lease term. Required: Based on the result of your audit, determine the following: ____________1. Gross Lease Receivable ____________2. Sales or Net Investment ____________3. Unearned Interest ____________4. Profit on sale Direct Finance Lease – Lessor (PAS 17 and PFRS
Sony Inc. is a lessor-manufacturer of expensive machinery. On January 1,2011, a
machinery is leased to another entity with the following information:
Annual rental payable at the end of each year P200,000
Lease term 4 years
Useful life of machinery 5 years
Cost of Machinery 300,000
Estimated residual value 50,000
Initial direct cost paid by lessor 20,000
Incremental borrowing rate of lessee 14%
Implicit interest rate of lessor known to lessee 12%
Note: At the end of the lease term on December 31,2014, the machinery will revert to lessor.
Problem 17. Except from the fact that the leased machinery will not revert to lesser because there is bargain purchase option of P50,000 at the end of lease term.
Required: Based on the result of your audit, determine the following:
____________1. Gross Lease Receivable
____________2. Sales or Net Investment
____________3. Unearned Interest
____________4. Profit on sale
Direct Finance Lease – Lessor (PAS 17 and PFRS
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