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How much is the interest revenue recognized by red

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Question - Red Company uses lease as a means of selling its equipment. On September 1, 2022, the company leased an equipment to Atlas Company. The cost of the equipment to Red Company was P684,000. The fair market value (which was the sales price) was P792,200 at the time of the inception of the lease.

Annual lease payments are 135,000 and are payable in advance for 8 years. The equipment has an expected economic life of 10 years. At the end of the lease term, title to the equipment will pass to Atlas. Implicit interest rate is 10%

Required - How much is the interest revenue recognized by Red in 2022?

Reference no: EM133147084

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