On December 31,2019, ABC Company leased equipment to DEF Company for a 4 year period ending December 31,2023. The equipment cost ABC Company P 365,760 and has an estimated useful life of 5 years. Its normal sales price is P 365,760. The lessee guarantees a residual value of P 80,000. Lease payment is due every December 31 and DEF Company made the first payment on December 31,2019. ABC's implicit interest rate is 10%. If the residual value is not guaranteed, how much net investment in the lease shall be recognized on December 31,2019?

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Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.