Reference no: EM132947191
Questions -
Q1) Yellow Company grants Brown Company first month rent-free under a 12-month lease for low-value items such as furniture, tablets, and laptops. The lease is effective April 1, 2021, and provides for a monthly rental of P12,000, payment of which will begin on May 1, 2021.
What is the amount reported in Brown Company's statement of financial position on December 31, 2021?
Q2) Black Company leased a piece of equipment to Red Company on April 1, 2021. The lease is appropriately recorded as a sale by Black. The lease is for an 8-year period ending March 31, 2029. The first of 8 equal annual payments of P175,000 (excluding executory costs) was made on April 1, 2021.
The cost of the equipment to Black is P840,000. The equipment has an estimated useful life of 10 years with an unguaranteed residual value of P100,000. At the end of the lease term, the leased equipment reverts to Black Company. The interest rate implicit in the lease is 10%.
The present value of a single payment at 10% for 8 periods is 0.4665. The present value of an ordinary annuity of 1 at 10% for 8 periods is 5.3349. The present value of an annuity due of 1 at 10% for 8 periods is 5.8684.
How much is Black Company's cost of sales as a result of the foregoing?