Reference no: EM132575825
Question 1. On January 1, 2015, Thelma Industries leased equipment to Trician Company for a four-year period ending December 31,2018. The equipment cost Thelma P300,000 and has an expected useful life of five years. Annual payments are P118,951, which includes P10,000 executory costs. The equipment's fair value is P400,000. The lessee guarantees the residual value of P80,000. Lease payment is due every December 31 and Trician made the first payment on December 31,2015. Trician's implicit interest rate 10%.
Thelma incurred P15,000 costs to consummate the lease contract.
Present value of 1 discounted at 10% for 4 periods is 0.68301.
Present value of annuity due of 1 for 4 periods discounted at 10% is 3.48685
Present value of ordinary annuity of 1 at 10% for 4 periods is 3.16987.
How much profit, inclusive of interest revenue, should Thelma report from this lease for the year ended December 31,2015?
a. P 100,000
b. P 125,000
c. P 140,000
d. P 162,991
Question 2. Use the same information given in 1. How much should Thelma report as net investment in lease on December 31,2015 statement of financial position?
a. P 291,049
b. P 320,154
c. P 321,049
d. P 331,049