What would be the new lease receivable

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Question - At the beginning of current year, Halsey Company leased an equipment to Tenant Company. The equipment had an original cost of P6M. The lease term was 5 years and the implicit interest rate on the lease was 15%. The lease is properly classified as a direct financing lease. The annual lease payments of P1,730,541 are made each Dec 31. The equipment is reverted to Halsey at the end of the lease term, at which time the residual value of machine will be P400,000. The residual value is not guaranteed. The PV of 1 at 15% for 5 periods is 0.4972 and the PV of an ordinary annuity of 1 at 15% for 5 periods is 3.3522.

Required -

a) At the commencement of the lease, what would be the new lease receivable on the part of Halsey Company?

b) From Halsey Company, how much is the gross investment in the lease?

c) Based on Halsey Company, what is the total unearned interest income and how much is the interest income for the current year? Please indicate your two number answers with a single space in between.

Reference no: EM132776050

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