What amount be recognized as gain on sale and leaseback

Assignment Help Accounting Basics
Reference no: EM133174593

Question - At the beginning of the current year. Matthias Company sold an equipment to Ricky Corporation for P880.000. an amount that is equal to its fair value. Because of Matthias Company's commitments to its customers to provide their needs for the next four years. Matthias Company immediately leaseback the said equipment.

Information relating to the sale and leaseback transaction is as follows

Carrying amount of the equipment-P680.000

Annual rental payable at the end of each lease year-200.000

Useful life of the equipment -10 years

Lease term-4 years

Implicit rate in the lease- 10%

Present value of an ordinary annuity of 1 at 10% for 4 periods - 3.1699

Required -

1. What amount should be recorded for right of use asset at the commencement of the lease?

2. What amount should be recognized as gain on sale and leaseback?

Reference no: EM133174593

Questions Cloud

Managing employee performance : What are some formal methods of communication in an effective performance management system?
Major moral dilemma for marketing managers : What does the text state as a "major moral dilemma for marketing managers"?
MBA 645 Optimizing Brands Assignment : MBA 645 Optimizing Brands Assignment Help and Solution, Southern New Hampshire University - Assessment Writing Service
Define and explain the film tourism trend : As a junior consultant for a private consultancy firm, your manager has asked you to conduct an analysis of a film tourism destination. Your analysis will form
What amount be recognized as gain on sale and leaseback : Present value of an ordinary annuity of 1 at 10% for 4 periods - 3.1699. What amount should be recognized as gain on sale and leaseback
Staffing the organization-americans with disabilities act : Why should OSHA compliance be incorporated in a job description or a job posting? How could ADA laws be used in the job application process?
Why are capabilities and value creation so interconnected : The ultimate goal of a technology-focused firm, whether it seeks to obtain technology internally or externally, is to create value for the firm and the firm's s
Find the term of the investment : Question - If Nilda earned P225 on her P4,500 investment earning 10% interest. Find the term of the investment
Calculate the interest her money earn at the end : Question - Genevieve invests P5,000 in the bank at 6% compounded annually. Calculate the interest her money earn at the end of 3 years

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd