Find what amount of interest revenue should be recorded

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Reference no: EM132772034

On July 1, 2020, Yum Company leased equipment to Burger Company for an 8-year period. Equal payments under the lease are P600,000 and are due on July 1 each year. The first payment was made on July 1, 2020. The interest rate contemplated by Yum and Burger is 10%. The cash selling price of the equipment is P3,520,000 and the cost of the equipment on Yum Company's accounting records is P2,800,000. The lease is appropriately recorded as a sales type lease.

Problem 1: What amount of profit on sale should be recognized for the year-ended December 31, 2020?

Problem 2: Using Yum Company's data, what amount of interest revenue should be recorded for the year ended December 31, 2020?

Reference no: EM132772034

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