Alcatel Company leased an asset to another company. The cost of the asset was P7,994,000. Terms of the lease specify 4-year life for the lease, an annual interest rate of 15%, and 4-year-end rental payments. The lease qualified as a direct financing lease. The lease provided for a transfer of title to the lessee at the end of the lease term. After the 4th year, the residual value was estimated at P1,000,000. The PV of 1 at 15% for 4 periods is 0.572, and the PV of an ordinary annuity of 1 at 15% for 4 periods is 2.855. 1. How much is the annual rental?
Alcatel Company leased an asset to another company. The cost of the asset was P7,994,000. Terms of the lease specify 4-year life for the lease, an annual interest rate of 15%, and 4-year-end rental payments. The lease qualified as a direct financing lease. The lease provided for a transfer of title to the lessee at the end of the lease term. After the 4th year, the residual value was estimated at P1,000,000. The PV of 1 at 15% for 4 periods is 0.572, and the PV of an ordinary annuity of 1 at 15% for 4 periods is 2.855. 1. How much is the annual rental?
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
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10GI: Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6...
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Alcatel Company leased an asset to another company. The cost of the asset was P7,994,000. Terms of the lease specify 4-year life for the lease, an annual interest rate of 15%, and 4-year-end rental payments. The lease qualified as a direct financing lease. The lease provided for a transfer of title to the lessee at the end of the lease term. After the 4th year, the residual value was estimated at P1,000,000. The PV of 1 at 15% for 4 periods is 0.572, and the PV of an ordinary annuity of 1 at 15% for 4 periods is 2.855.
1. How much is the annual rental?
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