How much gain shall be recognized from the sale leaseback

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Question 1. To raise operating funds, National Distribution Company sold its equipment to an insurance company on March 31, 2015 for P800, 000 and immediately leased the equipment back. The lease is for the final 12 years of the asset's total 25-year useful life. The equipment has a carrying value of P650, 000. The rental payments of P100, 000 are payable each March 31, starting March 31, 2015.

If the equipment's fair value on March 31,2015 was P710,000, how much gain shall be recognized from this sale-leaseback for the year ended December 31,2015?

Question 2. Use the same information given in 1. If the equipment's fair value on March 31,2015 was P800,000, how much gain shall be recognized from this sale leaseback for the year ended December 31,2015?

Reference no: EM132578867

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