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How much is the initial periodic payment should SHK be made

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Reference no: EM132752017

Question - Leasing signs an equipment lease contract with Song Hye Kyo (SHK) on January 1, 2020. The following information pertains to the lease.

Lease Term will be 5 years while the Equipment's useful life will be 6 years; Bargain Purchase Option - P80,000; Implicit rate, known by Song Hye Kyo - 11%; Fair value of the asset at January 1, 2020 - P930,000; Estimated recoverable amount at the end of 6 years - P120,000; Estimated residual value at the end of 6 years - P150,000

The cost of the asset to SJK Leasing is P930,000. SHK uses the double declining depreciation method to depreciate this type of equipment. Annual lease payments are made at the beginning of each year, starting January 1, 2020.

How much is the initial periodic payment should be SHK be made on January 1, 2020?

Reference no: EM132752017

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