Reference no: EM132809869
The following data relate to a sale and leaseback of equipment of Mrs. Robinson Co on December 31,2018.
Sales Price (equal to the present value of rentals) P993,630
Cost of Equipment 1,200,000
Accumulated Depreciation 100,000
Annual Rental Payable 300,000
Estimated remaining life 5
Lease Term 4
Implicit rate 8%
Problem 1: What amount of loss on sale and leaseback should Mrs. Robinson Co. recognized immediately as of December 31, 2018?
Option 1: Nil
Option 2: 106,370
Option 3: 206,370
Option 4: 506,370
Problem 2: Assume instead that the cost of the equipment is P1,000,000 and the accumulated depreciation is P100,000, what amount of gain on sale and leaseback should Mrs. Robinson Co. recognized as of December 31,2018?
Option 1: Nil
Option 2: 93,630
Option 3: 18,726
Option 4: 23,408
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