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How much is the total interest income to be earned

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Reference no: EM132851084

Problem - On December 31, 2018, Take it Easy Co. leased an equipment with a cost of P1,000,000 to Desperado Co. for 4 years which is also the useful life of the asset. The lease agreement specifies equal annual payment of P261,694 beginning on December 31, 2018.

At the end of the lease term, the equipment will revert to Take it Easy Co. A third party related to the lessee guarantees residual value of the equipment amounting to P150,000. The rate implicit on the lease is 11%.

Required - Based on the above data, answer the following:

1. How much is the total interest income to be earned over the lease term?

2. How much is the interest income in 2019?

3. How much is the leased-related asset to be shown as current in the statement of financial position on December 31, 2018?

Reference no: EM132851084

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