ZTech Company sells audio systems. It leases to Marina sands Company on January 1, 20x4 an audio equipment with carrying value of P 9,000,000 under the following terms: Guaranteed residual value of P 2,000,000 at the end of the lease terms of 5 years. Periodic payment every January 1 and July 1 of P 1,328,622 starts on January 1, 20x4; Lessor’s annual implicit rate, which is known by Marina Sands is 10. Ztech incurs commission and other costs related to the lease amounting to P 10,000. Required: How much total profit should Ztech recognize for the year ended December 31, 20x4? How much interest expense shall Marina Sands recognize for the year ended December 31, 20x4? What amount shall Marina Sands report for the equipment at December 31, 20x5? What amount of interest revenue should Ztech report for the year ended December 31, 20x5? What amount of financial asset shall Ztech report at December 31, 20x4?
ZTech Company sells audio systems. It leases to Marina sands Company on January 1, 20x4 an audio equipment with carrying value of P 9,000,000 under the following terms: Guaranteed residual value of P 2,000,000 at the end of the lease terms of 5 years. Periodic payment every January 1 and July 1 of P 1,328,622 starts on January 1, 20x4; Lessor’s annual implicit rate, which is known by Marina Sands is 10. Ztech incurs commission and other costs related to the lease amounting to P 10,000. Required: How much total profit should Ztech recognize for the year ended December 31, 20x4? How much interest expense shall Marina Sands recognize for the year ended December 31, 20x4? What amount shall Marina Sands report for the equipment at December 31, 20x5? What amount of interest revenue should Ztech report for the year ended December 31, 20x5? What amount of financial asset shall Ztech report at December 31, 20x4?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 2
ZTech Company sells audio systems. It leases to Marina sands Company on January 1, 20x4 an audio equipment with carrying value of P 9,000,000 under the following terms:
- Guaranteed residual value of P 2,000,000 at the end of the lease terms of 5 years.
- Periodic payment every January 1 and July 1 of P 1,328,622 starts on January 1, 20x4;
- Lessor’s annual implicit rate, which is known by Marina Sands is 10.
Ztech incurs commission and other costs related to the lease amounting to P 10,000.
Required:
- How much total profit should Ztech recognize for the year ended December 31, 20x4?
- How much interest expense shall Marina Sands recognize for the year ended December 31, 20x4?
- What amount shall Marina Sands report for the equipment at December 31, 20x5?
- What amount of interest revenue should Ztech report for the year ended December 31, 20x5?
- What amount of financial asset shall Ztech report at December 31, 20x4?
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