How much is the gain on sale leaseback to be recognized

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Question - On January 1,2020, an equipment of ABC Company with a carrying value of P 1,500,000 was sold at P 2,000,000 equal to its fair value to DEF Company. ABC immediately leased back the equipment from DEF Company with an annual rental of P 150,000 for 5 years, payable every December 31 of each year. The market rate of interest is 10%. How much is the gain on sale leaseback to be recognized by ABC Company?

a. P568,618.02

b. P426,463.51

c. P1,073,536.49

d. P357,845.49

Reference no: EM132764895

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