*see attachedWhat amount of interest income should be recognized by Ripple for the year ended December 31, 2020? a. 244,080b. 200,000c. 204,492d. 240,000 On January 1, 2020, Ripple Company entered into a lease agreementwith Gala Company for a machine which was carried on the accountingrecords of Ripple Company at Php2,000,000.Total payments under the lease which expires on December 31, 2029aggregate Php3,550,800 of which Php2,400,000 represents cost of themachine to Gala Company. Payments of Php355,080 are due eachJanuary 1 of each year.The interest rate of 10% which was stipulated in the lease is consideredfair and adequate compensation to Ripple Company.Gala Company expects the machine to have a 10-year life, no residualvalue and be depreciated on a straight line basis. The lease qualifiesas a sales type lease.

Lease means giving out the assets by lessor to lessee to use that assets in return of rent.…

Answered: *see attached What amount of interest…

*see attached What amount of interest income should be recognized by Ripple for the year ended December 31, 2020? a. 244,080 b. 200,000 c. 204,492 d. 240,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 9MC

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On January 1, 2020, EF Corp. leased an equipment for 5 years at semi-annual rental of ₱325,000 payable every June 30 and December 31. The equipment had an estimated useful life of 7 years. EF Corp. has an option to purchase the equipment from the lessor by paying the lessor ₱200,000 at the lease expiration date. The lessee paid lease bonus amounting to ₱280,000 and direct lease expense which included installation and commissioning costs amounting to ₱125,000. The lessor will however reimburse EF Corp. 15% of the direct lease expense as a lease incentive.The annual implicit lease rate on the lease known to both parties at the lease inception was at 10% while the incremental borrowing rate of the EF Corp. was at 12%. The asset had an estimated salvage value of ₱100,000 after 5 years and ₱60,000 after 7 years.Requirements: If at lease inception, EF Corp. is reasonably certain to exercise the purchase option: (Use a PV FACTOR rounded off to 4 decimal places) Entry to record the…
On January 1, 2020, EF Corp. leased an equipment for 5 years at semi-annual rental of ₱325,000 payable every June 30 and December 31. The equipment had an estimated useful life of 7 years. EF Corp. has an option to purchase the equipment from the lessor by paying the lessor ₱200,000 at the lease expiration date. The lessee paid lease bonus amounting to ₱280,000 and direct lease expense which included installation and commissioning costs amounting to ₱125,000. The lessor will however reimburse EF Corp. 15% of the direct lease expense as a lease incentive.The annual implicit lease rate on the lease known to both parties at the lease inception was at 10% while the incremental borrowing rate of the EF Corp. was at 12%. The asset had an estimated salvage value of ₱100,000 after 5 years and ₱60,000 after 7 years. Requirements: If at lease inception, EF Corp. is reasonably certain to exercise the purchase option: (Use a PV FACTOR rounded off to 4 decimal places) 10. Initial cost of the Right…
On January 1, 2010, Gallant Company entered into a lease agreement with Blacksheep Company for a machine which was carried on the accounting records of Gallant at P2,000,000. Total payments under the lease which expires on December 31, 2019, aggregate P3,550,800 of which P2,400,000 represents cost of the machine to Blacksheep. Payments of P355,080 are due each January 1 of each year. The interest rate of 10% which was stipulated in the lease is considered fair and adequate compensation to Gallant for the use of its funds. Blacksheep expects the machine to have a 10-year life, no residual value and be depreciated on a straight line basis. The lease is to be conceived as a sales type lease. What should be the total income before income tax derived by Gallant from this lease for the year ended December 31, 2010? a. 204,492 b. 604,492 c. 355,080 d. 755,080
Saludares Company leased a machinery on January 1, 2021 with the following information: Annual rental payable at the end of each year is P1,000,000. A P300,000 payment is made to the lessor to obtain a long-term lease. At the end of the lease term, dismantling and restoring the machinery is required by contract. The present value of this obligation is P330,000. Annual executory costs paid by the lessee amount to P50,000. Lease term is 4 years and the useful life of the machinery is 8 years. The implicit rate is 10%. The PV of an ordinary annuity of 1 at 10% for 4 periods is 3.17 and the PV of 1 at 10% for 4 periods is 0.68. 1. What is the depreciation for 2021?2. What is the lease liability on December 31, 2021?
On September 1, 2021, AYE Company entered into one-year nonrenewable lease, commencing on thatdate, for an office space and made the following payments to XYZ Properties:• Bonus to obtain lease - ₱ 120,000• First month’s rent - ₱ 40,000• Last month’s rent - ₱ 40,000The lease is considered “Short-term lease” in its income statement for the year ended Dec. 31, 2021. What amount should AYE report as rent expense for the year ended, December 31, 2021?
On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor)that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years.The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed bysubsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term.Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Prepare an amortization table for the lease liability.
On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor)that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years.The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed bysubsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term.Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Unit 4 Exercise Worksheet2Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any)a. What amount of lease liability will be recorded by Baal on January 1, 2020? (Round off presentvalue factors to…
On January 1, 2020, Baal Co. (lessee) entered into a contract of lease with Raiden Shogun Co. (lessor) that allows Baal to use specialized equipment for 4 years. The equipment had a useful life of 5 years. The following terms were agreed on January 1, 2020:• P250,000 annual rental, the first payment will be on on December 31, 2020 followed by subsequent payments every December 31 hereafter, for a total of 4 payments.• Implicit rate of the lease was 8%, while the incremental borrowing rate of Baal was 10%.• The lease agreement provides for a purchase option of P100,000, at the end of the lease term. Baal will exercise the option with reasonable certainty.The option was exercised by Baal Co. at the end of the lease term.(round off PV factors to 4 decimal places) Requirements: (round off any peso value to the nearest one peso to eliminate centavos, if any)a. What amount of lease liability will be recorded by Baal on January 1, 2020? (Round off present value factors to four decimal places,…
On January 1, 2021, Feline Financing Co. leased equipment to Kuting, Inc. information on the lease is shown below: Cost of equipment: 1,200,000Useful life of equipment: 5 yearsLease term: 4 yearsAnnual rental payable at the end of each year: 440,000 Additional information:The annual lease payment includes P36,196 pertaining to insurance taken by Feline on the equipment leased. Direct costs incurred by Feline in negotiating the lease amounted to P80,000. The implicit rate, after adjustment for the foregoing items, is 10%. How much is the net investment in the lease on January 1, 2021? 1,615,2161,280,000 1,200,0001,640,000 How much is the unearned interest income on January 1, 2021? 335,216128,000161,522120,000
On January 1, 2021, Feline Financing Co. leased equipment to Kuting, Inc. information on the lease is shown below: Cost of equipment: 1,200,000Useful life of equipment: 5 yearsLease term: 4 yearsAnnual rental payable at the end of each year: 440,000 Additional information:The annual lease payment includes P36,196 pertaining to insurance taken by Feline on the equipment leased. Direct costs incurred by Feline in negotiating the lease amounted to P80,000. The implicit rate, after adjustment for the foregoing items, is 10%. How much is the gross investment in the lease on January 1, 2021? 1,615,2161,280,0001,200,0001,640,000
On January 1, 2021, Feline Financing Co. leased equipment to Kuting, Inc. information on the lease is shown below: Cost of equipment: 1,200,000Useful life of equipment: 5 yearsLease term: 4 yearsAnnual rental payable at the end of each year: 440,000 Additional information:The annual lease payment includes P36,196 pertaining to insurance taken by Feline on the equipment leased. Direct costs incurred by Feline in negotiating the lease amounted to P80,000. The implicit rate, after adjustment for the foregoing items, is 10%. a) How much is the gross investment in the lease on January 1, 2021? 1,615,216 1,280,000 1,200,000 1,640,000 b) How much is the net investment in the lease on January 1, 2021? 1,615,216 1,280,000 1,200,000 1,640,000 c) How much is the unearned interest income on January 1, 2021? 335,216 128,000 161,522 120,000 d) How much is the carrying amount of lease receivable as of December 31, 2021? 968,000 1,280,000 1,004,196…
On January 1, 2021, Feline Financing Co. leased equipment to Kuting, Inc. information on the lease is shown below: Cost of equipment: 1,200,000Useful life of equipment: 5 yearsLease term: 4 yearsAnnual rental payable at the end of each year: 440,000 Additional information:The annual lease payment includes P36,196 pertaining to insurance taken by Feline on the equipment leased. Direct costs incurred by Feline in negotiating the lease amounted to P80,000. The implicit rate, after adjustment for the foregoing items, is 10%. How much is the carrying amount of lease receivable as of December 31, 2021? 968,0001,280,0001,004,1961,615,216 How much is the interest income for the year ended December 31, 2021? 161,522120,000100,000128,000