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How much is the net rent income for the year ended December

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Problem - Triste Company purchased a machine on January 1, 2020 for P7,000,000 for the express purpose of leasing it. The machine was expected to have a 10-year life with no residual value and the straight line method of depreciation is used.

On March 1, 2020, Triste Company leased the machine to Smutny Company for P1,500,000 a year for a 4-year period ending February 29, 2024.

Triste Company paid a total of P90,000 for maintenance and received P1,500,000 from Smutny Company on March 1, 2020. Additionally, on March 1, 2020, Smutny Company paid P300,000 to Triste Company as a lease bonus to obtain the 4-year lease. Triste Company paid P180,000 initial direct costs associated with negotiating the lease in February 2020.

Triste Company retains title to the property and plans to lease it to someone else after the 4-year lease period.

How much is the net rent income for the year ended December 31, 2020?

Reference no: EM132841530

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