Seventeen Company is a dealer in machinery. At the beginning of current year, a machinery was leased to another entity with the following provisions:
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- Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased toanother entity with the following provisions: Annual rental payable at the end of each year 2,000,000Lease term and useful life of machinery 5 yearsCost of machinery 6,000,000Residual value – guaranteed 1,000,000Implicit interest rate 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 There is no transfer of title nor bargain purchase option. What amount should be reported as sales revenue? 7,770,00010,000,0007,200,0007,000,000 What is the interest income for 2023? 932,400864,000840,000880,000Bitag is a dealer in machinery. On January 1, 2023, a machinery was leased toanother entity with the following provisions: Annual rental payable at the end of each year 2,000,000Lease term and useful life of machinery 5 yearsCost of machinery 6,000,000Residual value – guaranteed 1,000,000Implicit interest rate 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 There is no transfer of title nor bargain purchase option. What amount of cost of goods sold should be reported? 5,430,0006,000,0007,000,0007,200,000France Company is a dealer in equipment. At the beginning of current year, an equipment was leased to another entity Problem 14-15 (IAA) with the following provisions: Annual rental payable at the end of each year Lease term and useful life of machinery Cost of equipment Residual value-unguaranteed Implicit interest rate PV of an ordinary annuity of 1 at 12% for 5 periods PV of 1 at 12% for 5 periods 1,500,000 5 years 4,000,000 500,000 12% 3.60 0.57 At the end of the lease term the equipment will revert to the lessor. The entity incurred initial direct cost of P200,000 in finalizing the lease agreement. 1. What is the gross investment in the lease? a. 7,500,000 b. 8,000,000 c. 4,000,000 d. 4,500,000 2. What is the net investment in the lease? a. - 5,400,000 b. 5,685,000 c. 4,000,000 d. 3,500,000 3. What interest income should be reported for current year? a. 682,200 b. 648,000 c. 900,000 d. 960,000 4. What amount should be reported as gross profit on sale! a. 1,485,000 b. 1,685,000 c.…
- AEI Company is in the business of leasing new sophisticated equipment. At the beginning of current year, an equipment was delivered to a lessee under a direct financing lease with the following provisions: Cost of equipment 3,390,000 Annual rental payable at the end of year 600,000 Useful life and lease term 10 years Implicit interest rate 12% Present value of an ordinary annuity of 1 at 12% for 10 years 5.650 Present value of an ordinary annuity of 1 at 11% for 10 years 5.889 The entity incurred and paid initial direct costs of P143,400 in negotiating and arranging the lease. The equipment will revert to AEI Company at the end of the lease. Required: 1. Compute the…4. What amount should be reported as gross profit on sale? of current year, an equipment was leased to another entity France Company is a dealer in equipment. At the beginning Problem 14-15 (IAA) with the following provisions: Annual rental payable at the end of each year Lease term and useful life of machinery Cost of equipment Residual value-unguaranteed Implicit interest rate PV of an ordinary annuity of 1 at 12% for 5 periods PV of 1 at 12% for 5 periods 1,500,000 5 years 4,000,000 500,000 12% 3.60 0.57 At the end of the lease term the equipment will revert to the lessor. The entity incurred initial direct cost of P200,000 in finalizing the lease agreement. 1. What is the gross investment in the lease? a. 7,500,000 b. 8,000,000 c. 4,000,000 d. 4,500,000 2. What is the net investment in the lease? a. - 5,400,000 b. 5,685,000 c. 4,000,000 d. 3,500,000 3. What interest income should be reported for current year? а. 682,200 b. 648,000 c. 900,000 d. 960,000 a. 1,485,000 b. 1,685,000 c.…At the beginning of current year, Waxxy Company sold a machine and immediately leased back. The following data relate to the sale and leaseback transaction: Sale price at above fair value 6,000,000 Fair value of machine 5,000,000 Carrying amount of machine 4,500,000 Annual rental payable at the end of each year 800,000 Remaining life of machine 10 years Lease term 4 years Implicit interest rate 8% Present value of an ordinary annuity of 1 at 8% for four periods 3.312 There is no transfer of title to the lessee nor…
- On 1.1 2016 YZ company leased Equipment from ABC company, the fair value of Equipment OMR680496 and useful life of it 5 years without residual value, the lessee paid rental payments of OMR123000 at the beginning of each year. The lessee's incremental borrowing rate 12%. The balance on 1/1/2016 should be: Select one: a. OMR373594 O b. OMR123000 c. None of the options d. OMR474245On 30 June 2020, Cambridge Ltd leased a vehicle to Awamutu Ltd. Cambridge Ltd had purchased thevehicle on that day for its fair value of $89,721. The lease agreement, which cost Cambridge Ltd $1,457 tohave drawn up, contained the following provisions:Lease Term 4 yearsAnnual payment, payable in advance on 30 June each year $23,900Economic life of vehicle 6 yearsEstimated residual value at end of economic life 52,000Estimated residual value at end of lease term $15,000Residual value guaranteed by lessee $15,000Interest rate implicit in the lease 7%The lease is cancellable, but cancellation will incur a monetary penalty equivalent to 2 years rentalpayments. Included in the annual payment is an amount of $1900 to cover reimbursement for the costsof insurance and maintenance paid by the lessor. The directors of Awamutu Ltd have indicated that theyare interested in acquiring the asset at the end of the lease.a) Prepare the following for the lessor, Cambridge Ltd:1. the lease receipts…At the beginnig of current year, East Company leased a new machine from North Company with the following information: Annual rental payable at beginning of each lease year 4000,000Lease Term 10 yearsUseful life of machine 12 yearsImplicit interest rate 14% Present value of an annuity of 1 in advance for 10 periods at 14% 5.95Present value of 1 for 10 periods at 14% 0.27 East company had the option to purchase the machine upon the expirtation of the lease term by paying P500,000. The purchase option is reasoably certain to be exercised. What amount should East Company…
- On 1.1 2016 YZ company leased Equipment from ABC company, the fair value of Equipment OMR680496 and useful life of it 5 years without residual value, the lessee paid rental payments of OMR123000 at the beginning of each year. The lessee's incremental borrowing rate 12%. The interest expense on 13/12/2016 should be: Select one: a. OMR 44831 O b. OMR44351 c. OMR 35451 O d. None of the optionsMaureen Inc. is a dealer of machinery. On January 1, 2020, it leased a machinery to another entity under the following terms:· Annual rental payable at the end of each year: 1,500,000· Lease term and useful life of machinery: 5 years· Cost of machinery in Maureen’s books: 4,000,000· Fair value of machinery on commencement: 6,000,000· Guaranteed residual value upon return: 500,000· Implicit rate: 12%Relevant PV factors are: PV of ordinary annuity for 5 periods at 12% is 3.60 and PV of 1 for 5 periods at 12% is 0.57. Machinery will revert back to Maureen at end of lease term. Fair value of the asset on December 31, 2024 (end of lease) is 350,000. Maureen also incurred initial direct costs of P200,000. How much is the gross profit of Maureen on January 1, 2020? a. 1,800,000 b. 1,485,000 c. 1,685,000 d. 2,000,000An entity purchased a plant asset under a deferred payment contract. The agreement was to pay 10,000 per year for five years. The plant asset is initially measured at ? Choices: a. 50,000 b. 50,000 plus interest c. Present value of 10,000 annuity for five years at an imputed interest. d. Present value of 50,000 for five years at imputed interest.