Compute the net income of Pam Company

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Question - On January 1, 2020, Pam Company purchased an equipment for P3,000,000 cash for the purpose of leasing it. The machine is expected to have a 10-year life from the date of purchase. On April 1, 2020, the equipment was leased to Ruby Company for a three-year period, at a monthly rental of P40,000 payable at the end of every month. Additionally, Ruby Company paid P120,000 to Pam Company on April 1, 2020 as a lease bonus. Pam Company paid repairs of P20,000 relating to 2020. Compute the net income of Pam Company from the lease on December 31, 2020.

a. 60,000

b. 150,000

c. 70,000

d. 0

Reference no: EM132836021

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