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How much is the rent expense reported

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Q1) Yellow Company grants Brown Company first month rent-free under a 12-month lease for low-value items such as furniture, tablets, and laptops. The lease is effective April 1, 2021 and provides for a monthly rental of P12,000, payment of which will begin on May 1, 2021.

How much is the rent expense reported in Yellow Company's profit or loss for the year ended December 31, 2021?

Q2) A mid-rise building with carrying amount of P5,000,000 was sold at its fair value of P6,000,000. The seller-lessee immediately leased back the building from the buyer with annual rental of P500,000 for ten years with lease payment, payable at the end of each of the next ten years. On this date, the market rate of interest is 8%.

PV of an ordinary annuity of 1 at 8% for 10 periods is 6.7101

PV of an annuity due of 1 at 8% for 10 periods is 7.2469

How much is the gain on the sale-leaseback?

Reference no: EM132945531

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