Von Company leased a piece of equipment to Sam Company on April 1, 2021. The lease is appropriately recorded as a sale by Von. The lease is for an 8-year period ending March 31, 2029. The first of 8 equal annual payments of P175,000 (excluding executory costs) was made on April 1, 2021. The cost of the equipment to Von is P940,000. The equipment has an estimated useful life of 10 years with a guaranteed residual value of P100,000. At the end of the lease term, the leased equipment reverts to Von Company. The interest rate implicit in the lease is 10%. 1. How much is the total financial revenue (interest revenue) over the lease term? (Use four decimal places)
Von Company leased a piece of equipment to Sam Company on April 1, 2021. The lease is appropriately recorded as a sale by Von. The lease is for an 8-year period ending March 31, 2029. The first of 8 equal annual payments of P175,000 (excluding executory costs) was made on April 1, 2021. The cost of the equipment to Von is P940,000. The equipment has an estimated useful life of 10 years with a guaranteed residual value of P100,000. At the end of the lease term, the leased equipment reverts to Von Company. The interest rate implicit in the lease is 10%. 1. How much is the total financial revenue (interest revenue) over the lease term? (Use four decimal places)
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 2E: Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement...
Related questions
Question
Von Company leased a piece of equipment to Sam Company on April 1, 2021. The lease is appropriately recorded as a sale by Von. The lease is for an 8-year period ending March 31, 2029. The first of 8 equal annual payments of P175,000 (excluding executory costs) was made on April 1, 2021.
The cost of the equipment to Von is P940,000. The equipment has an estimated useful life of 10 years with a guaranteed residual value of P100,000. At the end of the lease term, the leased equipment reverts to Von Company. The interest rate implicit in the lease is 10%.
1. How much is the total financial revenue (interest revenue) over the lease term? (Use four decimal places)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning