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What amount of cost of sales should be reported

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Question - Crimson Company leased equipment to Lind Company on January 1, 2020 for an eight year period. Equal payments under the lease are P500,000 and are due on January 1 of each year. The first payment was made on January 1, 2020. The carrying amount of the equipment is P2,000,000. The lease is appropriately accounted for as sales type lease. The implicit interest rate of 12% (use 5 decimal places only). There is an unguaranteed residual value amounting to 250,000. What amount of cost of sales should be reported for 2020?

Reference no: EM133185269

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