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How much is the gross investment in the lease on January

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Question - On January 1, 2021, Feline Financing Co. leased equipment to Kuting, Inc. information on the lease is shown below:

Cost of equipment: 1,200,000

Useful life of equipment: 5 years

Lease term: 4 years

Annual rental payable at the end of each year: 440,000

Additional information:

The annual lease payment includes P36,196 pertaining to insurance taken by Feline on the equipment leased. Direct costs incurred by Feline in negotiating the lease amounted to P80,000. The implicit rate, after adjustment for the foregoing items, is 10%.

a) How much is the gross investment in the lease on January 1, 2021?

b) How much is the net investment in the lease on January 1, 2021?

c) How much is the unearned interest income on January 1, 2021?

d) How much is the carrying amount of lease receivable as of December 31, 2021?

Reference no: EM133087655

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