How much is the total profit of the lessor

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Question - Makati Corp. manufactures Indang equipment. Internal Leasing purchased an MRI machine from Makati for P1,000,000 and leased it to Indang Group, Inc. on January 1, 2018.

Lease description:

Quarterly rental payments P65,258: beginning of each period

Lease term Five years (20 quarters)

No residual value; no bargain purchase option

Economic life of MRI machine Five years

Implicit interest rate and lessee's incremental borrowing rate 12%

Fair value of asset P1,000,000

Present value of an annuity due of P1: n = 20, i = 3% 15.3238

Round your answers to the nearest whole peso amounts.

Required -

a) How much is the lease receivable balance of the lessor at the end of 2018?

b) How much is the total profit of the lessor in 2018?

Reference no: EM132844840

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