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What amount shall be reported as sales

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Question - Wamboo Company is a dealer in machinery. On January 1, 2018, a machinery was leased to another company with the following provisions: Annual rental payable at the end of each year 3,000,000 Lease term and useful life of machinery 5 years Cost of machinery 8,000,000 Residual value - unguaranteed 1,000,000 Implicit interest rate 12% PV of an ordinary annuity of 1 for 5 periods at 12% 3.60 PV of 1 for 5 periods at 12% 0.57 At the end of the lease term on December 31, 2022, the machinery will revert to Wamboo Company. Wamboo incurred initial direct cost of P300,000 in finalizing the lease agreement.

1. What amount shall be reported as (1) sales and (2) cost of goods sold in 2018?

2. What amount shall be reported as (1) sales and (2) cost of goods sold in 2018 assuming the residual value is guaranteed?

3. What amount shall be reported as gross profit on sale in 2018?

4. What is the interest income for 2018?

5. What amount should be included in current assets in relation to the lease on December 31, 2018?

6. What is the carrying value of the lease receivable as of December 31, 2019?

7. What amount should be included in non-current assets in relation to the lease on December 31, 2019?

Reference no: EM132892387

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