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How much is the sales revenue

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Reference no: EM132838547

Problem - On January 1, 2020, Eagle Company, dealer in equipment, leased equipment to Agila Company. The lease is appropriately accounted for as a sale by Eagle Company and as a purchase by Agila Company.

The lease is for a 10-year period which approximates the useful life of the asset. The first of 10 annual payments of P500,000 was made on January 1, 2020.

Eagle Company purchased the equipment for P2,675,000 and established a list selling price of P3,375,000 on the equipment. Eagle Company used the perpetual inventory system.

The present value on January 1, 2020 of the rent payments over the lease term discounted at 12% was P3,165,000.

Required - Based on the information above, answer the following:

1. How much is the sales revenue?

2. How much is the total increase in net income for the year ended December 31, 2020?

Reference no: EM132838547

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