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How much should be credited to the sales accounts

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Reference no: EM132545423

On January 1, 2019, Decrypt Company leased an asset with a carrying amount of P4,162,070 for six years. Annual rentals of P1,000,000 is payable every yearend. The leased asset will revert to Decrypt at the end of the lease term with a residual value of P100,000. Decrypt would record a gross profit of P249,680 if the lease is a sales-type finance lease. [Round off implicit interest rates to the nearest percentage.]

Question 1: Differentiate the two types of accounting for finance lease used by lessors

Question 2: Assuming it is a direct finance lease, how much is the lease receivable as of yearend 2019?

Question 3: Assuming it is a direct finance lease, how much is the unearned interest income as of yearend 2019?

Question 4: Assuming it is a direct finance lease, how much is the interest income for 2019?

Question 5: Assuming it is a sales-type lease, how much is the interest income for 2019?

Question 6: Assuming it is a sales-type lease, how much is the net income from the lease during 2019?

Question 7: Assuming it is a sales-type lease, how much is the unearned interest income as of yearend 2019?

Question 8: Assuming it is a sales-type lease, how much is the lease receivable as of yearend 2019?

Question 9: Assuming it is a sales-type lease with guaranteed residual value, how much is the cost of sales?

Question 10: Assuming it is a sales-type lease with guaranteed residual value, how much should be credited to the sales accounts?

Question 11: Assuming it is a sales-type lease with unguaranteed residual value, how much is the cost of sales?

Question 12: Assuming it is a sales-type lease with unguaranteed residual value, how much should be credited to the sales accounts?

Reference no: EM132545423

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