Reference no: EM132952017
Question - On January 2, 2000, a manufacturer-lessor leased out a special equipment for P500,000, payable at the end of each year. The incremental borrowing rate is 10%. The lessor paid P50,000 to obtain the lease.
The cost and fair value of the equipment are P1,500,000 and P2,000,000. The equipment had a residual value of P150,000. The useful life of the asset is 10 years, while the lease term was for 5 years.
The fair value of the asset is P80,000 at the end of the lease.
Required -
How much is the cost of goods sold recognized on January 1, 2000?
How much is the loss on the lease at the end of the lease term?
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