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Prepare the entry to record the transaction on january

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Question - On January 1, 2020, MCU Company sold an equipment with carrying amount of P6,000,000 and a remaining useful life of 10 years to Painer Company for P9,000,000. MCU Company immediately leased the equipment back under a 10-year finance lease by payment of P1,080,000 starting on December 31, 2019. Rate implicit in the lease on January 1, 2020 is 10%.

The asset's fair value at that time was P6,000,000 and will be depreciated using the straight-line method. The transaction meets the criteria of IFRS 15 to be accounted for as sale.

Required - Prepare the entry to record the transaction on January 1, 2020?

Reference no: EM133184661

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