Reference no: EM133123318
Questions -
Q1. Argentina Company leased out equipment under an operating lease to Austria Company. The lease term is 5 years and the lease payment are made in advance on January 1 of each year as shown in the following schedule:
January 1, 2020 P1,000,000
January 1, 2021 1,200,000
January 1, 2022 1,400,000
January 1, 2023 1,600,000
January 1, 2024 1,800,000
The total contract price is P7,000,000.
How much is the rental income on December 31, 2020?
Q2. At the beginning of the current year, Ruffa Company leased a building to Dindi Company under an operating lease with a 10 year lease term.
Annual rental is P500,000. Ruffa paid P150,000 to a real estate broker as an initial direct cost.
The building is depreciated P120,000 per year. Ruffa incurred insurance and property tax expense of P90,000
How much is the net rent income for the current year?
Q3. Denmark Company is in the business of leasing new sophisticated equipment. The lessor expects a 12% return on net investment. All leases are classified as a direct financing leases.
At the end of the lease term, the equipment will be transferred to the lessee.
At the beginning of current year, equipment is leased to a lessee with the following information:
Cost of equipment to the lessor P3,390,000
Residual value - unguaranteed 0
Annual rental payable at the end of each year 600,000
Initial direct cost incurred by the lessor 143,400
Useful life and lease term in years 10
Implicit interest rate 12%
How much is the net investment in the lease?
How much is the gross investment in the lease?
How much is the interest income in the lease?