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What is the gross investment in the lease

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Question - On january 1, 20x1, lessor enters into a lease of equipment. Information on the lease is shown below.

Cost of equipment P 278,948

Useful life of equipment 5 years

Lease term 4 years

Annual rent payable at the beginning of each year 80,000

Intereat rate implicit in the lease 10%

Required -

1. What is the gross investment in the lease?

2. What is the net investment in the lease?

3. What is the unearned income on initial recognition?

4. What are the journal entries over the lease term?

Reference no: EM132782436

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