What amount of unearned interest income is to be record

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Problem 1: Sunlife Company used leases as a means of marketing products. On January 1, 2019, Sunlife Company leased an equipment to Sundown Company for P500,000 per year for 10 years, payable on December 31 of each year. The cost of the equipment is P2,000,000 and the fair value is P3,072,500 on January 1, 2019 using an implicit rate of 10%. The fair value of the equipment approximates the present value of rentals. At the expiration of the lease, title to the equipment passes to Sundown Company. Sunlife employs the perpetual sysytem. What amount of Unearned interest income is to be recorded on the inception of the lease on January 1, 2019?

Reference no: EM132672135

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